Can I Get a Mortgage After Bankruptcy?
“Can I get a mortgage after bankruptcy?” is one of the most common questions that consumers with a less than perfect credit history ask. As a lender, it’s important to help consumers understand both sides of that process. Yes, it’s absolutely possible to obtain a loan after a bankruptcy. At the same time, a bankruptcy – especially a recent one – will call into question your ability to pay back the loan and increase lender scrutiny of your application. There are a number of elements that lenders consider and steps that consumers can take to help get approved for financing to buy a home after they’ve filed.
Take time to rebuild
How much time has passed since you filed for bankruptcy? If you’ve recently filed for bankruptcy, then there is a high probability that you’ll be advised to wait some time before reapplying. The more time that has elapsed since your bankruptcy, the more time you’ve had to repair your credit and establish different habits for lenders to consider. For example, rent an apartment or condo and pay your month on time and in full each month to get a landlord reference you can use. Use the time after your financial crisis to focus to building a good payment history, a track records of savings, and to address any debts that may not have been erased in your bankruptcy.
Show financial institutions stability
One of the major factors that loaning institutions take into account when processing a loan is the current level of financial stability of your family. Even if you have a bankruptcy in your background, as long as you’re showing signs of commitment with a steady job and a secure monthly income, you may be approved for a mortgage loan. However, it’s important to ensure that you’re keeping up with your payments under your reorganization plan, if applicable, after you filed for Chapter 7 or Chapter 12 bankruptcy. Not only will your performance under any reorganization plan be scrutinized, but your employment situation, income level, and overall financial behavior since filing will be closely considered.
How can you effectively prove that you’re creditworthy enough to get a mortgage? Usually, people who’ve gone bankrupt have a credit rating which tends to be in the lower five hundreds. A higher score increases your chances of approval while minimizing your interest rate. Even with a score in the low six hundreds, your mortgage interest rates may be higher than the average. To increase your chances of getting a loan, first focus on raising your credit score. Obtaining lines of credit, using them responsibly, and building an on-time payment history – while keeping your overall balances low – is one of the best things you can do each month.
Are you a Las Vegas resident who has filed for bankruptcy that’s thinking about purchasing a home? Contact Sydnee Johnson today to arrange for a personalized consultation and to discuss a range of financing options that may be right for your situation.