Mortgage Loans After Bankruptcy - How to Rebuild Credit Following a Bankruptcy

While bankruptcy remains on your credit for up to ten years, and may result in a higher interest rate on auto loans and credit cards, filing for bankruptcy will not prevent you from receiving a home loan. Fortunately, there are ways to obtain a mortgage after bankruptcy. Here are a few tips that will put you on the road to homeownership.

Although it is possible to receive a mortgage loan one day following a bankruptcy, you can expect to pay a very high interest rate. A high interest rate may increase your monthly payments by several hundred dollars. If you can afford this amount, applying for a home loan may be a wise choice. However, if you were to wait at least 24 months after your bankruptcy, you may be able to receive a reasonable interest rate.

Waiting two years before applying for a mortgage loan is ideal because you are given ample time to rebuild or re-establish credit. If you apply for a loan before opening a new credit account, mortgage lenders are reluctant because you have not shown any credit improvements.

On the other hand, if you were to obtain at least three to four new credit accounts, pay the balances on time, and never miss a payment; mortgage lenders will notice credit improvements. Thus, they have confidence in your ability to repay future loans. If possible, attempt to payoff the credit card balances each month, or carry low balances. This way, you avoid huge finance charges.

Choosing a lender for a home mortgage following a bankruptcy is not difficult. True, traditional lenders and mortgage companies rarely offer decent rates for individuals who have filed bankruptcy. However, if you improve your credit score, you may be able to obtain a good rate from a sub prime lender.

Sub prime lenders specialize in offering loans to individuals with "less than perfect credit." Moreover, if you submit an application through a mortgage broker, you will receive multiple offers from various sub prime lenders. Comparing rates and terms is beneficial because you can select the financing package with the best deal.

See Also:

Online Mortgage in UK - Introducing the Best Mortgage Plan Across UK
Add the term online and it will open for you an exhaustive assortment of opportunities. Add online to mortgage and it will have the same effect. So many people want to get mortgage programme and get with it fast. The online mortgage in UK indisputably takes lesser time and simplifies the entire ... more...

Mortgage Glossary - A Glossary of Mortgage Terms You Should Know
Acceleration Clause A clause in a mortgage defining that the entire outstanding balance can become due and payable should mortgage default occur. If the entire balance is not paid, the property will be foreclosed.Adjustable Rate Mortgage (ARM) Mortgage with interest rates that may be adjusted by ... more...

Lowest Mortgage Rates UK Lowering the Cost of Mortgage
Mortgage is the most widespread industry that offered to loan borrowers with real estate as collateral. Mortgage has so many innovations and opportunities that a loan borrower can exploit them for their own benefit. You must have heard and read it elsewhere that mortgage rates are at an all time ... more...

Types of Loans
Loan Types What types of loans are available to me? There are many different types of mortgage offered to consumers. Some of the most popular mortgage broker are the FHA Home Loan (Federal Housing Administration) and the VA Loan . Because the FHA mortgage and VA mortgage are guaranteed by the ... more...