Getting A Mortgage After Bankruptcy

Are you wondering if you will qualify for a mortgage after bankruptcy?  Take heart, because you probably will.  Remember that there are many home lenders out there that are willing to work with people who have declared bankruptcy.  So if you are turned down by one, do not lose faith.  With some legwork, you will find just the right mortgage for your life after bankruptcy.

Firstly, How Much Time Has Passed Since Your Discharge?

Many mortgage lenders will want you to wait 2 years before applying for a mortgage after bankruptcy.  They want to see how you handled your finances in those two years, and if you stopped making some financial mistakes that might have led to your bankruptcy in the first place.

Ideally during these two years you have put yourself on a budget.  A budget is a simple plan that keeps track of what goes out and what comes in.  You do not have to buy any fancy, expensive software to figure out how to do a budget.  You can do it in a notebook, or in the Excel spreadsheet program that came with your computer.

Start Preparing NOW For Your Mortgage After Bankruptcy

You need to record every single expense as well as every single income.  You bought a coffee on the way to work?  Record it.  You got a tip from a customer?  Record it.  It is tough, yes.  But the best way to get in the habit of paying close attention to your finances is to record every single transaction.  Eventually, you will be so good at budgeting you won’t have to do that.  But it takes time.

Sometimes people get in the habit of using money orders or cashier’s checks to pay their bills.  This is not a good idea.  It is more expensive than having a checking account, and it can be more difficult for a future lender to track your spending habits.

If you don’t have any bank accounts, then after your bankruptcy has been discharged you should open both a checking and a savings account.  Check to see if your employer offers direct deposit.  If so, sign up for it.  It won’t cost you anything and it is easy to do.

Put money in your savings account every week.  Even if it is just a small amount, say five dollars, you should still put it in.  Studies show that to create a habit, you need to do something up to 30 times.  Putting money in your savings is an excellent habit to get into, and you will never regret it.

Home Mortgage Financing After Bankruptcy

Be aware that a bankruptcy can shave up to 100 points off your credit score.  That is why it is so important to work on building better credit as soon as your bankruptcy is discharged.  Make sure you have your financial house in order before you apply for a mortgage.

Pay everything on time.  Do not think a small bill that you paid late will not affect your credit score.  That is a misperception.  Lenders look at your credit rating so they can decide the likelihood of them being paid back.  If they see that you have a steady habit of paying everything on time, they are much more likely to approve you for a loan.

You might have heard of mortgage loans brokers, these are specialists people who are looking for a bankruptcy mortgage hire to smooth out their finances.  What a private mortgage broker does is gather all the paperwork and information necessary for you to apply for a mortgage.  In all honesty, you should be doing this yourself.  Many people wind up in financial problems because they refuse to deal with their own finances everyday.  This is not a good habit to get into.

Down Payment On A Mortgage After Bankruptcy

While the usual down payment people are expected to put down on a home is 3-5%, some lenders might insist you put down as much as 20% percent because you declared bankruptcy.  Be aware not all lenders will insist on this, which is why it is so important to shop around.  Still, the more you can put down on a mortgage, the better off you will be.  Your payments and interest rate will be lower.

You can apply for a mortgage in person at a bank or credit union, or choose the online route.  Many times online banks turn out to be the easiest to work with, and have the fastest turn around time.  They also might be able to offer lower interest rates on any mortgage loan.

One of the major indicators a potential lender will look at is your job.  If you have been in the habit of job-hopping, it definitely needs to stop after you declare bankruptcy.  The longer you have been at your current job, the more stable you appear to lenders.  Know that they will call the human resource department of your company to verify your employment, too. It may not be easy but take heart it is definitely possible to get a mortgage after bankruptcy.