Mary Wise asked:




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.

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.

Jessie

Roxanne K asked:


My daughter and son in law have gone through chapter 7 bankruptcy in Oregon. They had a 1st and a 2nd mortgage (which was a home equity loan). There is an auction date set for the sale of their home, but their first mortgage company is giving them the opportunity to ‘save’ the home through a loan modification before it goes to auction. My son-in-law has had recent employment and there is a slight chance they could stay in their home if the details are worked out. My question is this; can the 2nd mortgage (home equity-different lender) come back and lien the house? Or worse yet, foreclose even though the 2nd was discharged during bankruptcy? My daughter doesn’t want to bother with modifying the 1st if there’s a big chance of the reviving the 2nd. This is in the state of Oregon, but maybe the laws are the same in all states.

Thanks for the input!

Agnes

Carrie Reeder asked:




Years ago, people who had a bankruptcy on their credit report were unable to get a decent mortgage, if they were able to get approved for a mortgage at all. However, today, the rules have changed. More and more lenders are offering mortgage loans to people who’ve filed bankruptcy. If you have a bankruptcy on your credit report, and you’re looking to get a mortgage loan, read this article to find out three things you need to know about getting a home loan after bankruptcy.

Waiting Two Years Earns You Better Interest Rates

If you need to apply for a mortgage earlier than two years after the date that
your bankruptcy went through, you’ll likely get approved; however, your interest
rates will be a lot higher than they would be if you wait two years. After two
years, most lenders will see you as less of a risk, and you will qualify for
much better mortgage terms.

A Bigger Down Payment Makes You a More Qualified Borrower

When you apply for a mortgage loan, your lender looks at something called your
LTV ratio. LTV is the amount of money you are borrowing divided by the value of
your home. For example, if your home is worth $100,000, and you are borrowing
$90,000, then your LTV is 90%. 100% LTV’s are generally reserved for borrowers
with near-perfect credit. However, the lower your LTV is, the more likely you
will get approved for your mortgage. Most lenders rarely decline loans with an
LTV at or lower than 80%.

Some Lenders Specialize In After-Bankruptcy Mortgages

Some lenders specialize in loaning to people with either bad credit or past
bankruptcies. These lenders will not view you as more of a risk than their other
borrowers because all of their borrowers are in the same situation as you are.
Your best bet is to shop online and compare interest rates and terms between
different lenders. This way you can be sure that you are getting the best deal.

Mario