Getting a Mortgage after Bankruptcy

If you’ve recently declared bankruptcy, you might think it’s out of the question to obtain a mortgage to refinance, consolidate debt, or buy a home. On the contrary, many people are able to qualify for such loans as soon as a few days after they declare bankruptcy. Many lenders and programs exist that offer mortgages after little or no time after a bankruptcy discharge. In the following post, we’ll give you a few tips to help you improve your chances of qualifying for a mortgage loan post-bankruptcy.

Good Things Come to Those Who Wait

It’s true that you can get a mortgage loan almost immediately after a bankruptcy, but you will probably have to pay outrageous interest rates and/or fees. If you would like a better deal on your mortgage, you would do well to wait. Once you’ve waited two years after your bankruptcy, you will have many more options from which to choose. Some lenders won’t even consider you for a mortgage loan until the two-year mark, so waiting a while will mean you will have more opportunities. After the two-year mark, you should be able to get financing fairly easily, and you should be able to qualify for 100% financing on a mortgage loan. Just make sure in the interim that you pay all of your bills on time.

Tips on Qualifying

One way to improve your chances of qualifying for a mortgage after bankruptcy is to continue paying the debts on time that were not discharged. For example, if you have a home or auto loan that was not discharged in the bankruptcy, make sure you stay current on your payments. If your credit report shows that you are paying on time on at least a few accounts, it will look better to mortgage lenders. Secondly, limit the amount of debt you have. Avoid credit cards and bank loans if possible, as too much debt will make it nearly impossible to qualify for a mortgage. This is because your lender will look at your debt-to-income ratio when you apply for the loan, and you want it to be as small as possible.

Spruce up Your Credit Report

Before you apply for a mortgage, you should order a copy of your free credit report. Check the report for accuracy. Make sure all of the debts you included in your bankruptcy have been discharged. Also check for any signs of identity theft or other fraudulent crimes. If you see any errors or suspicious items, immediately dispute the questionable item in writing with the appropriate credit bureau. Once these questionable derogatory items are removed, you will have a much better chance of qualifying for a mortgage loan.