Three Quick Steps to Getting a Mortgage After Bankruptcy


Finding a mortgage after bankruptcy is much easier today than it used to be. After you have declared bankruptcy and cleaned up your credit, you can easily qualify for a mortgage with a reasonable rate. To get the best rate possible you will want to have your finances in order and be able to pay a large down payment.

Step One: Give Yourself Enough Time

Most lenders prefer that it has been at least two years since bankruptcy has been filed. If you have paid all your payments on time since filing bankruptcy and have waited the two years, you will most likely be able to get complete financing for your home. If you want to get a mortgage before the end of the two years it is a little harder, but can be done. You will need to have a great payment history since filing for bankruptcy, and will need to have a down payment that is between three and five percent of the loan for approval. You may also have to deal with less than desirable interest rates.

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Step Two: Clean Up Your Credit

To reduce your rates as much as possible it may be a good idea to get one credit card and use it for an amount that you can regularly pay off each month. This will show lenders that you are now able to keep up with making payments. This will also help improve your credit score. You may also want to consider setting up an appointment with a credit counselor and making it a point of telling your lender that you have taken the steps necessary to help you get out of your debt problem. Credit counseling agencies that are affiliated with the National Foundation for Credit Counseling are highly respected. You need to fix the main source of your money problems; lenders will not help you get a mortgage if this is not done. Pay rent on time, and if needed get a dated receipt for every payment. If you do this for two years it is strong evidence to lenders that you will pay your mortgage payment

Step Three: Save Up for a Down Payment

After taking care of your bankruptcy payments, saving up for a down payment should be your next priority. If you are not able to qualify for a mortgage loan because you have no money for the down payment another option is to find a down payment assistance program. There are numerous down payment assistance programs, but the two largest are Neighborhood Gold and the Nehemiah programs. Many people consider borrowing money from relatives to make the down payment, but you will want to talk to the lender before doing this because some are strict about where the down payment money comes from.

If you follow these three steps you will find yourself in a very good situation for a mortgage; perhaps even better than some people who have never filed for bankruptcy. Just remember, that sometimes bankruptcy is necessary and many lenders are willing to help people out who show that they have their finances under control.


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