Mortgage after Bankruptcy

Since 2008, bankruptcies have been rising. Many families and individuals are experiencing bankruptcies and home foreclosures for basically the same reasons. There are very few jobs on the market, and housing prices are at an all time loan. However, housing prices were at an all time high just a couple of years ago, which is why many people were priced out of purchasing a new home. But the economy has proven itself to be a slow mover and many economists are predicting tougher times ahead. People who have recently been through a bankruptcy believe that there is no chance of getting a mortgage for a new home.

The good news is that there are specific mortgage lenders who specialize in providing a mortgage for those who have been through a bankruptcy. The only stipulation that keeps people from qualifying for a mortgage after bankruptcy is time. If the individual has recently been through a bankruptcy, they will not be able to qualify for a mortgage from most lenders. There is a two year waiting period that people must go through after bankruptcy before they are advised to apply for a new mortgage. After 2 years have gone by, a person who has suffered from a bankruptcy will be able to obtain a mortgage.

On top of being able to qualify for a mortgage after 2 years of bankruptcy, the borrower should be able to qualify for 100 percent of the financing as well. If the individual has been paying on payments that are reported to the credit bureau during the 2 year waiting period, their chances of qualifying for a mortgage will increase even more. It’s important to start rebuilding a credit history as soon as possible after a bankruptcy in order to get a mortgage after the 2 year waiting period.

Some mortgage lenders require three years, and other mortgage lenders will require other factors that the individual must abide by to qualify for a mortgage. Individuals who have recently gone through a bankruptcy are advised to search online for the options that are available to them. Bankruptcy will most likely require the individual to use a subprime lender, which is usually associated with charging a higher interest rate on the mortgage. However, the current home prices are low, and individuals who can afford a mortgage are recommended to take advantage of these low home prices before prices go back up to their previous amount.

Individuals who have waiting for 2 years, and have reestablished a history of on time payments may still experience a slightly higher interest rate on their mortgage. This is because the mortgage lender will view the borrower is a risk more than other average borrowers. However, if the individual has a large enough down payment, they will be able to avoid the higher interest rates on their mortgage. Mortgage lenders will scrutinize a borrower’s employment history, credit rating, debt-to-income ratio and other factors, especially if the borrower recently experienced a bankruptcy.

Mortgage brokers are highly advised for individuals who have been through a bankruptcy. A mortgage broker will have the knowledge of finding the right mortgage loan without breaking the bank of the individual. If a person who has gone through a bankruptcy can afford a mortgage broker, they should hire one. Hiring a mortgage broker is an excellent investment for those who have been through a bankruptcy. Mortgage brokers can identify which mortgage lenders will help the individual save money on interest without a large down payment. There are plenty of options made available to individuals that have gone through a bankruptcy, and most of these options are made available online.