Monday, July 10, 2006

Mortgage Loans & Bankruptcy

Mortgage Loans & Bankruptcy

Qualifying for a mortgage loan after a recent bankruptcy is not impossible. Although most lenders recommend that you wait at least 24 months before applying for a mortgage, there are ways to obtain the loan sooner. Lenders are generally willing to approve recent bankrupt individuals for a home loan because the home or property serves as collateral. Therefore, if you default on the mortgage, the lender forecloses on the property. In most cases, obtaining a mortgage loan is a perfect way to re-establish credit.

After a bankruptcy is discharged, you need to begin rebuilding your credit before applying for a mortgage loan. This is accomplished by opening new lines of credit. Applying for a credit card is the easiest and the quickest way to improve credit history. At first you may have to apply for a secured credit card, however, once your credit rating improves, you will probably be able to qualify a major credit card.

It is important to maintain low balances, avoid late payments, and if possible, try to pay off the balance each month as to avoid unnecessary interest charges.
Waiting 24 months after a bankruptcy to apply for a mortgage loan is beneficial because not only do you have time to make improvements on your credit history but you are also able to obtain a mortgage loan with 100% financing and little money down. If you attempt to purchase a home soon after a bankruptcy, you may have to come up with a sizable down payment.

Feel free to contact us if you have any questions or concerns regarding mortgage loans after bankruptcy. The more you know about your loan options, the better chance you have of getting the best possible loan to fit your family’s needs.

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