5 Secrets to Getting a Mortgage After Bankruptcy

mortgage after bankruptcy

If you’ve had to file for bankruptcy, you know how much of a toll it takes on your financial reputation. It can seem impossible to rebuild your credibility, and it’s easy to feel like you’d need a miracle to buy a new home.

The good news? You can still become a homeowner even if you’ve had to file for bankruptcy in the past. You just have to learn how.

We’ve put together 5 secrets to getting a mortgage after bankruptcy.

1. Wait

No matter what you filed under, you’re going to have to be patient before you can apply for another mortgage after bankruptcy.

The length of time you’ll have to wait varies. The most common period of time is around two years, which usually applies to anyone who filed a Chapter 7 bankruptcy.

If you filed for Chapter 13 bankruptcy, though, you’ll have to play the waiting game for 3 to 5 years instead.

2. Open New Credit Accounts

While you’re waiting, you can work towards making yourself a good investment for a bank or lender.

Step one should be to start rebuilding your credit score. It took a hit after you applied for bankruptcy, so you’ll need to build it back up before filling out any new applications.

It might seem counterintuitive to open new lines of credit, but you need to resurrect your credit score. While you’re at it, make sure you’re paying all of your bills on time and saving money for a down payment.

3. You Can Still Get An FHA Loan

An FHA loan is a great option for people who are applying for a mortgage after bankruptcy. Since it’s financed by the government, the restrictions aren’t nearly as strict as they are for a conventional loan.

It doesn’t require perfect credit, which makes it a perfect option in this situation. Plus, non-conventional credit like paying your rent on time will work in your favor.

If you haven’t been able to save a lot of money, don’t worry. With FHA loans, you only need to put 3.5% down.

4. Find A Conventional Mortgage With Low Money Down

One downside of FHA loans is that their interest rates tend to be a little bit higher. If that’s something you want to avoid, you can still apply for conventional mortgages.

Your credit has to be better to do this, but in some cases you can find conventional mortgage loans with low interest rates and low money down.

5. Apply For A USDA Loan In Rural Areas

If you’re looking to live in a rural community and don’t make a lot of money — think low-income or lower middle class — you can apply for a USDA loan.

If you can’t qualify for other loans, this option doesn’t require a lot of money down and is low-interest. In some cases, you might not even have to wait the full two years. That varies from person to person, though, so be sure to check what the guidelines are for your situation.

Are You Ready to Finance Your New Mortgage After Bankruptcy?

Our team of mortgage consultants is ready to help you navigate through this confusing process. Get in touch today to find out how we can help you bounce back and secure a mortgage for the house of your dreams.

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