Getting a Mortgage after Bankruptcy
Filing for bankruptcy may save some of your property, but it’s one of most financially damaging decisions a person can ever make. There are other measures you can take as an alternative to bankruptcy and save your credit rating.last updated Wednesday, May 17, 2023
#Mortgage After Bankruptcy #Timely Payments
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Sometimes, bankruptcy may be your only play. In that case, be prepared to be denied access to loans/mortgages by lenders for the next 7-10 years — when bankruptcy records remain on your credit report.
If you ever want to get a mortgage, you must wait until your bankruptcy has been discharged. It’s only then that you can start to repair the damage done to your credit score. Most banks will still deny a two-year mortgage after your bankruptcy has been discharged. Here are a few tips to you get a mortgage after bankruptcy:
Timely Payments
Ensure that any line of credit remains open and make timely payments. If you have an auto loan, pay on time. Paying your open lines of credit on time is the best way to rebuild your credit score.
Get New Credit
You need a credit card on your credit report to get a mortgage. You will not be able to obtain a credit card immediately after bankruptcy. You can, however, get a secured credit card. You will be required to open a savings account and make a deposit as security for the card. You cannot exceed the amount of your initial deposit. Offers from credit card companies will start coming in after 6-12 months of making timely payments.
Start Saving For a Down Payment
If your credit record is still poor, you better start saving. Making a down payment can help you secure a mortgage. You may also get a mortgage in the form of a hard money loan, but you must have at least a 30 percent down payment to qualify for a hard money mortgage.
Consider an FHA Loan
It will be hard to qualify for a mortgage with a less-than-stellar credit score. Luckily, other mortgage products are designed for people with low credit scores. One of them is the FHA loan. FHA is a government-funded loan program with a small down payment (3.5 percent) and is just good as a traditional loan.
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