Bankruptcy can be an option when facing financial woes, but it comes with a price. Bankruptcy can affect your credit for up to 7 years.
If you have filed bankruptcy, buying a home or refinancing your home are still an option. There are lenders out there that can and still will do loans for people as quickly as one day out of Bankruptcy. You may be limited on what programs you are able to choose from and your interest rate might not be as low as someone with a 700+ score but you definitely do have options available. Your local mortgage broker is the ideal person to work with for these types of home loans.
Rebuilding your credit after bankruptcy is an important first step. Many companies offer secured credit cards to help with this. A secured credit card works just like a regular credit card, but the credit limit is based upon how much money you have on deposit with the credit card company.
Most important of all, any new credit established after the bankruptcy or things that you reaffirmed on need to be paid on time. This will help you credit scores to improve over time.
Most mortgage lenders will refuse to give you a loan if you haven't reestablished your credit since the bankruptcy. Those that will have very poor interest rates and severe limitations on what they will do.
It is important to see bankruptcy not only as a way to escape your financial troubles, but as a second chance in the financial world. Chances are, if you are filing for bankruptcy, you have made some mistakes with the credit that has been granted to you. This great country provides you with a means to get fresh start. Take advantage of that opportunity. Learn from any mistakes you may have made, and avoid making them again.
It may be difficult to find financing if you have filed for bankruptcy, but there is always a lender that is willing to help and make your dreams a reality.
Just because you filed for bankruptcy does not mean you cannot qualify for a mortgage. There are many lenders that are willing to give you a second chance. Your interest rate will be higher, but as you build equity and your credit score improves you will be able to refinance into a better mortgage.
There are programs that you can get a mortgage one day after bankruptcy and it was typical that you had to wait a minimum of four years to obtain a conforming mortgage. But now with new guidelines from Fannie Mae you may be able to get a conforming mortgage in under the previous guideline of four years.
Once you’re ready to buy a home after bankruptcy, it’s best to start by determining how much house you can afford. Including principal, interest, taxes and insurance, it’s a pretty safe estimate that you can afford to pay a mortgage equal to 20% of your pretax income.
Its important to start rebuilding your credit after filing for bankruptcy since it can stay on your credit report for up to 10 years on a chapter 7 and 7 years for a Chapter 13 after being paid in full.
There are different lenders out there that will provide mortgage loans to people one day out of bankruptcy. The rate may not be pretty. But it is a home loan that will help get the person into a home so that they can refinance down the road into a better loan program and rate once their credit is re-established.
And if you find a lender to work with you, you are unlikely to get a competitive interest rate. Your bankruptcy status stays on your credit bureau file for ten years following the date that you are declared insolvent. While many mortgage companies will not touch any applicants with negative reports on their credit file, there are some lenders out there who specialize in bad credit and bankruptcy home loans.
If you are a homeowner considering bankruptcy there are loans available that can improve your cash flow. Refinancing may be an option that helps you avoid bankruptcy. Contact a mortgage broker to discuss your situation.