Using Bankruptcy Mortgage Lenders

When people are going through bankruptcy they are often worried about how it will effect their credit worth. Will they will ever be able to borrow credit again? Will they ever be able to apply for a mortgage to buy their dream Home?

It is natural to be concerned about this because  after insolvency a persons credit worth will have taken a battering however, that does not mean they will never be able to borrow again, far from it. In the past people who were bankrupt found it  a challenge being approved for a mortgage. However, things have changed with a greater number of bankruptcy mortgage lenders coming on to the market.

Bankruptcy Financing

In the past there has been a stigma attached to people who became bankrupt and in many cases the vast majority of mainstream mortgage lenders would not consider them for any kind of home equity loan. Arguably this is still the case and with the recent financial meltdown of the economy lenders have become increasingly cautious when it comes to lending any form of credit.

Time can be the best way to improve your chances and you really should only apply for a mortgage 3 years after you have been discharged. This is no guarantee as a chapter 13 or 7 bankruptcy will stay on your public record for up to 7 and 10 years respectively. However, there are mortgage lenders who are not willing to take the risk.

Over the past 10 years the rates of personal bankruptcies has increased which has created a whole new market of ex homeowners who need assistance to get back on the property market after bankruptcy. To serve this growing market more bankruptcy friendly mortgage lenders or able to offer people a ray of hope.

How To Improve Your Chances of Obtaining A Mortgage Loan After Bankruptcy

You can vastly improve your chances of getting  a bankruptcy mortgage if you can prove that you have a good credit history. Therefore, it is essential that you build up a good credit score as soon as you have been discharged. You can do this quickly by applying for secured credit cards and using them responsibility.

The type of bankruptcy that you have filed for can also influence your success in achieving a mortgage. For example, lenders will look more kindly on a a chapter 13 because it remains on your file for only 7 years compared to the 10 years for a chapter 7. This can mean a person does not have to wait as long to receive  approval for a mortgage.

What To Look For In Bankruptcy Mortgages

These and bad credit mortgages will have higher interest rate charges compared to the mainstream home loans. Therefore, it is important that you can afford the monthly payments. As always do not go with the first lender that you come across. Shop around to get the best deal on bankruptcy mortgage rates.

It is also worth considering beforehand which which type of interest you want to go far. If you prefer stability then a fixed rate interest would be best for you. Variable rates are lower but you would have to take into consideration that these rates will go and down with fluctuations of the basic rate. Interest only can be the cheapest option however, with this option the main loan is never paid off.

Check for any hidden fees such as cancellation and processing charges. The lender should inform you in writing with all the charges you will be paying. If you need assistance in choosing you could use a mortgage advisor who could can provide you with guidance in choosing the most suitable loan.

Bankruptcy FHA Loans

The FHA Loan Programs was introduced to help first time home buyers and current residential owners to purchase or refinance their properties. There are a variety of payment assistance programs to choose from. As these mortgages are insured by the Federal Housing Authority (FHA) lenders are able to offer mortgages to people who are on low income, have credit card debt problems and bankruptcies against their record.

The FHA loan requirements needed to qualify are  as follows:

• To be a lawful US resident and to be of legal age to sign a mortgage application and contract.
• Sufficient income to cover the monthly payments and other expenses that include utility costs.
• Applicants must be able to provide a credit report.

On the last requirement it is important that the first year or two after the bankruptcy discharge that a good credit record is built up. This is to prove to the lenders that you have changed your ways when it comes to handling money and that you have shown you can take the responsibility to honor the requirements of the FHA home loan.

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