Many think that it would be impossible for them to acquire for a loan after bankruptcy. This is because most lenders would be reluctant to do so. If you have filed for bankruptcy, lenders would feel that it would be risky to let you borrow any amount because you do not have the means to make the payments. This is why it is essential that you wait for about two to three years before you apply for a mortgage.
However, even if you have waited for at least two years, loan application will not be easy. You can also expect a few unfavorable things. One is that you will pay higher interest rate. You will also be expected to pay higher down payment.
Although this is the case, you should not be paying more than what you should. Be careful when looking for lenders because many take advantage of those who reflect bankruptcy in their credit history. To avoid such lenders, compare the Good Faith Estimate from the different banks and investigate the right rate that you should be paying.
There are also important things you need to bear in mind. Within the two to three ears waiting period, you should start repairing your credit. This will make it easier for you to apply for a new mortgage. Here are some of the things you can do.
1. Always make timely payments. If you have debts that were not discharged during the bankruptcy, see to it that you find means to pay them on time. You should also pay for your other obligations and be current with them. There are your credit card as well as utility charges. Stay current as this will significantly affect your credit score.
2. Limit your debts. This is very important because your debtor will surely check your debt-to income ratio. If it is not good, you will have a problem with the approval. Limit the use of your credit card so that you can pay the outstanding balance off. If you can pay your other existing debts, pay them as well.
3. Get a good and stable job. When you find one, stay with the company. This will influence the decision of the borrower. If you have a good job, you will also have a good income. This will also improve your debt-to-income ratio. Keep a record of your other sources of income as well. You might have a part time job that helps you earn extra.
4. Check your credit report. This is very important as errors usually happen in the reporting of your transaction. Monitor your record because the mistakes will usually affect your score. You are entitled to a free copy of your credit report once a year. Take advantage of this and check your report regularly. If you find errors, ask that they be corrected right away.
You can definitely acquire mortgage after bankruptcy. Just be patient and work hard to establish a good credit again. It is also important that you find a lender who will not take advantage of your credit history.