Have you had a bankruptcy and don’t know how it will affect you in regards to getting a mortgage loan? It may not be as bad as you think. You had a bankruptcy. Lots of people do and rebound from it. Here is some information to keep in mind when getting your mortgage after going through the process.
You probably won’t be able to get into a mortgage for at least two years after the bankruptcy has been discharged if you filed chapter 7. That is usually the waiting period lenders will impose before considering a loan. Once that time frame is up, there should be no issues getting financed. If you filed chapter 13 bankruptcy, the Federal Housing Administration will consider a loan in as little as one year.
The important thing for a consumer to do is begin immediately re-establishing their credit and building their credit score. This can be done by paying rent and utility bills on time. Or, perhaps obtaining a secured credit card, a credit card where the balance is paid in by the cardholder to establish the account.
You should, however expect to pay a higher interest rate. You will pay the higher rate, because you are a higher risk. Keep good records of all of the payments you have made since the discharge. If the bank sees that you have been on time with your payments and are current on your accounts, it may help to keep your interest rate on the lower side. Remember, it isn’t just the bankruptcy that affects your ability to get the loan or the interest rate. Employment history, loan to value and down payment also are a factor in the loan decision.
Securing the loan may be challenging. Stay positive, patient, and persistent. Lenders may want to do extensive digging into your financial records. Be as cooperative as possible. You don’t have to stay with one lender. Shop around. Get advice from multiple sources. Talk to your local brick and mortar banker. Dealing with someone you have a relationship with is helpful. Talk to a broker. Brokers deal with many types of situations and may be able to steer you in a path you haven’t thought of. Search online. There are many online companies that deal solely with helping people who have had bankruptcies obtain mortgages.
Banks will consider anyone with a bankruptcy a high risk. High risk is just that, high risk. Not impossible. You can still get a mortgage. You may have to jump through more hoops. You may have to pay more interest (which is deductible on your taxes). But you can buy a house.