Having to file for bankruptcy is an unfortunate situation to have to be in. It is a difficult process and not a decision to be taken lightly. After filing for bankruptcy your credit report will reflect that making it harder to get any type of financing or credit loans. With a bankruptcy on your credit report you might feel hopeless in getting any kind of credit at all, let alone a mortgage. Many bankruptcy attorneys will recommend that you not even attempt to get a loan or credit for one to two years after filing for bankruptcy, but often after only six months many lenders will offer restricted credit accounts.
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Mortgage Loans
Applying for a mortgage is a bigger process than just applying for a credit card. Most lenders are going to stick to the one to two year rule before even processing an application with a bankruptcy on it. If you are eager to buy another home after a bankruptcy it is important to really work on building your credit over the two years waiting period.
Cleaning up Your Credit
Before applying for a mortgage loan after bankruptcy really make sure that you make all your payments on time. Get copies of your credit report regularly to make sure that all information is being report correctly. Often credit reporting agencies will have false or old information. Keeping on top of your credit report and getting those issues corrected will help keep your credit score moving in the right direction making it easier to qualify for a mortgage when the time comes.
Down Payment
Due to the recently housing bubble burst and post-bankruptcy it will be harder to get 100% financing on a home purchase. Securing a mortgage loan after bankruptcy means that you will most definitely have to have a substantial down payment. Often you can get approved with a down payment of 3-5%, but a larger down payment is always better.
If you cannot come up with a down payment for your home purchase after bankruptcy there are agencies out there to help you. Check with your lender, real estate agent, or financial representative to see what options you might have for helping with a down payment. The rules of home buying have changed in the last few years, it is not as easy to get a mortgage and lenders are being much more diligent with whom they lend to, but that does not mean if you have a bankruptcy in your past it is impossible.
After Bankruptcy
After filing for bankruptcy it is easy to feel like you will never recover, but bankruptcy gives you the chance for a start over. Staying on top of your bills, making payments on time and really staying on track with savings will make it not only possible to secure a mortgage loan after bankruptcy, but easy.
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