Bankruptcy

Tips for Buying a Home, After a Bankruptcy

Generally it takes about three years after someone declares bankruptcy for them to be approved for a mortgage loan. There can however be a few things that need to be taken into consideration like current income and home equity that can position someone to qualify faster. Before you should be considering a refinance situation you need to get a copy of your credit report and make sure that everything is correct. You certainly would not want to be denied do to a mistake.

Buying a Home, After a Bankruptcy

It usually takes 2-3 years after a bankruptcy before a borrower is able to be approved for a home mortgage loan. However, there are variables like payment history on credit, income, and home equity that may allow a borrower to qualify much sooner. Before consider refinance, borrowers should find a recent copy of their credit report and pour over it to ensure that everything is accurate. No borrower would want to be denied, or charged a ridiculous interest rate based on an inaccuracy.

When comparing lenders, be sure to analyze:

• Whether or not the lowest possible interest rates are offered.
• How popular the lender is among other home refinancing borrowers.
• Do they appear to be a solid, reputable lender?

Mortgage Loan After Bankruptcy: How Long Before You Apply for a Mortgage

Generally, it is important not to apply for a mortgage loan too soon after a bankruptcy. It is possible to secure a mortgage just as soon as the bankruptcy has been discharged, but the interest rate and terms of the loan may not be desirable.

Though a bankruptcy may “stay with you” for as long as ten years, qualifying for a mortgage during this period of time is not completely out of reach. It is possible to qualify for a competitive mortgage rate in as little as three years, even with a bankruptcy on your record. The time frame will depend on how severe your credit problems are, and the amount of time necessary to build up a favorable credit history.

While working to establish a history of good credit, it is important to begin saving for the down payment you will use for your mortgage. With a sizeable down payment, more options are available to you when you go to apply for a mortgage. Generally, you will also qualify for a better interest rate if you have a sizeable down payment, which means smaller monthly payments and a smaller loan overall.

When you have improved your credit rating and are ready to begin applying for mortgage loans, consider first applying for government programs that use the FHA or VA for assistance. Your mortgage is guaranteed by the VA if you qualify and are a veteran. The FHA offers programs for low income individuals, and those who are suffering credit problems, to help them secure mortgage loans that are guaranteed.