If you want to increase your chances of qualifying for a mortgage after bankruptcy, here are some steps you can take:
First, if you plan to apply for a mortgage after bankruptcy, you will want to have any inaccurate or obsolete negative information on your credit reports corrected or removed. This can help increase your credit score.
Also, you will want to establish some new accounts, and pay them in a timely manner over time. If you’ve paid the accounts on time for about 18-24 months since your bankruptcy, this should help rebuild your credit – which can be a plus when applying for a mortgage after bankruptcy.
Next, you will want to work with an experienced mortgage broker. Why? Because buying a home is probably going to be one of the biggest investments you’ll make. You will want to have an experienced professional guiding you through the lending process – especially when it comes to applying for a mortgage after bankruptcy.
A mortgage broker typically has access to dozens of lenders and will probably have a good idea of which ones will (and will not) approve you for a mortgage after bankruptcy. In addition, they will be able to tell you what to expect in terms of the financing process.
So how do you find a mortgage broker? One way is to to ask friends or real estate agents for a referral. Once you have a few names, set up an appointment to interview each mortgage broker.
Among other questions, you will want to know if they have successfully been able to get other individuals a mortgage after bankruptcy. You also want to make sure they are licensed.
Another question you will want to ask is what type mortgage loan (A, B, C, or D) the mortgage broker thinks you can qualify for. Why? The lower the grade of the loan, the higher the interest rate. This is an important consideration when applying for a mortgage after bankruptcy.
In addition, there are other important questions you will want to ask a potential mortgage brokers – ones that could help you save money and/or increase your chances of qualifying for a mortgage after bankruptcy. While there isn’t enough room to cover them here, I go into detail on them in After Bankruptcy Credit Solutions.
Also make a point to bring your financial information with you when you meet with a mortgage broker. For example, you should have your income and expenses available as this will help the broker determine the loan amount you may be able to qualify for when it comes to a mortgage after bankruptcy.
Generally speaking, most lenders will allow you to get a home loan with a payment of up to 28% of your gross income. So if you make $4,000 per month, that would be $1,120. But keep in mind that this just an example. Again, a good mortgage broker can explain the criteria that each lender has.
If you have copies of your credit reports from each of the major credit reporting agencies (Experian, Equifax, and Trans Union) this will help also. Your credit report will play a major role when it comes to qualifying for mortgage after bankruptcy.
On that note, if you want to increase your chances of qualifying for a mortgage after bankruptcy, make sure that any inaccurate or obsolete negative information is removed from your credit report. This is important for two reasons: (1) It can mean the difference between qualifying or not qualifying for a mortgage after bankruptcy, and (2) if you end up qualifying for mortgage after bankruptcy, any inaccurate or obsolete negative information on your credit report could cost you up to $1,000s or even $10,000s in additional interest.
How do remove any inaccurate or negative information from your credit report, so you can improve your chances of qualifying for a mortgage after bankruptcy? There are specific steps you need to take. While I cover them in After Bankruptcy Credit Solutions, there is not enough room to go into detail here. Just remember that ideally you want rebuild your credit history before applying for a mortgage after bankruptcy.
By the way if you think that removing inaccurate or negative information from your credit reports takes a long time, I have good news. There is a way to have it removed in as little as 72 hours – the service is typically not available directly to consumers. In After Bankruptcy Credit Solutions I show you how to find this type service if you are trying to qualify for a mortgage after bankruptcy.
In this article we touched on two important steps you can take if you plan on applying for a mortgage after bankruptcy: Correcting or removing any inaccurate or obsolete negative information from your credit reports, and finding a mortgage broker to guide you through the lending process.