Category Archives: Mortgage Loan

Mortgage Loan

Taking out a home mortgage loan after being a bankrupt – What are your prospects?

Every month, there are tens and thousands of people who file bankruptcy mostly to wipe off their debts and start afresh. Many of them realistically feel that it will probably be many years before they can get a home mortgage loan or an existing refinance loan as bankruptcy stays on their credit report for either 7 or 10 years, depending on the type they’ve filed. In reality, they can become eligible to take out a mortgage loan in less than a year only if they can diligently improve their financial picture. The mortgage loans that are guaranteed by the FHA or the Federal Housing Administration are usually permitted one year after the consumer exits a Chapter 13 bankruptcy and two years after he exits a Chapter 7 bankruptcy. However, if you wish to know the ways in which you can rejuvenate your finances, here are some tips that you should consider.

Mortage Loan

1. Be aware of the requirements of the lender: There are some lenders who are stricter about having a policy of waiting for at least 3 years before considering a financing option. While some others consider lending a loan to a consumer before 2 years from the date of discharge. You should know these details in order to approach the lender at the right time. Without getting informed, if you take out a home loan, you might end up with a higher interest rate.

2. Don’t expect low rate deals: As you’re on the receiving end and as you’ve filed bankruptcy recently, it is most likely that you won’t be given lower mortgage rates and therefore you should never expect more than what you can get. Another factor that will decide the mortgage loan rates is how well you’ve paid off your bills since the last discharge.

3. Take some rock solid finance management steps: Getting a mortgage loan post bankruptcy will certainly include taking some rock solid personal finance management steps. You require taking all the positive steps through which you can either build positive credit history or boost your credit score. The more you rejuvenate your personal finances, the more favorable rates you might get.

4. Understand the effects of bankruptcy on your mortgage loan: A Chapter 13 bankruptcy stays on your history for 7 years and a Chapter 7 stays for 10 years. However from the first day of your bankruptcy discharge, as your credit starts improving with time, the score also increases. With every payment that you make, your score will keep in increasing and you can have a score 700 even before the bankruptcy goes off your credit report.

5. Be patient: After you’ve filed bankruptcy, securing a home loan might be challenging as many lenders might be hesitant to offer a loan. However, you need to be patient so as to overcome this situation and end up with a favorable home mortgage loan.

So, even though you have bankruptcy on your credit report, remember that this is not the end of the world. However, manage your finances and thereby repay your home loan on time in order to get rid of secured debt.…