Qualify For A Bankruptcy Mortgage Loan 5 Tips

By Robbie T. James

Bankruptcy is something that most people try to avoid at all costs. And yet, for some families or individuals, at some point it may become the only rational option in terms of finding a path back to financial stability.

There are a lot of reasons why a person may choose to declare bankruptcy. It could be due to the loss of a job, making it impossible for a person to keep up with their bills and expenses. For other folks, they may find that their outstanding credit card debt balance exceeds their annual income – and they decide that they do not stand much of a chance in terms of paying down that debt.

Many people hear horror stories about the bankruptcy of someone they know, whereby the person who declared bankruptcy is not able to qualify for any credit at all. This is particularly disturbing if you are considering bankruptcy – or have already gone through it – and would still like to buy a home of your own. How can you qualify for a mortgage, you may wonder, if you have gone through this?

If you are looking for a bankruptcy mortgage loan, consider these 5 tips for securing a loan faster:

1. Wait until your bankruptcy discharges completely before pursuing another loan:

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It is a good idea not to pursue any mortgage loan options until your bankruptcy process has fully discharged. There is a certain finality once everything is official, and that is the best time to start looking into your loan options.

2. If you own a home at the time of your bankruptcy, you will be able to keep your current mortgage:

Note that if you own a home as you are declaring bankruptcy, in most cases you will be allowed to keep your home – provided that you are able to keep up with your mortgage payments. If you are not, you should consider selling the home and finding something that is within your budget.

3. Within 18-24 months after your discharge, you should be able to apply for a new mortgage at similar rates:

There is evidence that shows that, on average, a person can usually qualify for a mortgage within 18-24 months after their discharge. The rate for which they can qualify is usually comparable to what they could have qualified for pre-bankruptcy.

4. Your chances of qualifying for a loan can be more favorable since you have less debt after your discharge:

In a way, your chances of qualifying for a loan can actually be more favorable than they were before. Even though your credit score undoubtedly took (or will take) a huge hit during this process, you are actually in a much better debt position after the process is over. You no longer owe nearly as much money – maybe none at all. This is actually quite favorable in the eyes of a lender.

5. Be sure to apply to at least 3 lenders:

Do yourself a favor and increase your odds of qualifying for the best-possible loan by applying with at least three mortgage lenders. Be up front with each of them about your financial past (they’ll find out eventually anyway!) and explain your credit-worthiness. Any current employment and proof-of-income records that you can present should help your case.

Consider these 5 tips as you look for the right bankruptcy mortgage loan.

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