How to Qualify for a Mortgage after Declared Bankruptcy

Nowadays, more credit card holders have become aware of how bad credits can affect their whole life. A person who keeps bad credit scores tend to have less chances of getting any kind of loan, including a mortgage approval. Some have started to become more careful about their spending habits, while some continued to watch their debts pile up without making any move.

If you were one of those people who failed to maintain good financial records, you would have greater chances of being stuck in bankruptcy. When you have declared a bankruptcy, it would endlessly haunt you even during the process of filing your mortgage application. Lenders would feel hesitant about extending financial help once you fail to rebuild your finances. This article offers information on recovering after bankruptcy and qualifying for a mortgage despite its terrible effects on your credit records.

The nature of bankruptcy chapters

Pull out your credit reports and review the bankruptcy chapter that you have incurred. If you have a chapter 13 bankruptcy, expect it to stay on your records for as long as seven years. Meanwhile, a chapter 17 record would not be erased from your financial history unless ten years has already passed.

This sounds frustrating for most people, especially for those who wish to get a mortgage as soon as possible. If you reacted the same way that they did, you should not mope nor lose hope. Actually, this mark on your financial report would not hinder you from repairing your bad credits. You can still develop your credit and reach average credit scores regardless of the mark made by your bankruptcy filing. All you have to do is repay your outstanding and high-interest debts while paying all your monthly bills on time. It is not too late to change your horrible financial habits.

Be patient with the "waiting time"

Most lending companies recommend borrowers to submit to their suggested "waiting time". Usually, such companies strictly implement this rule in order to give distressed borrowers ample time to rebuild their finances.

Those who are patient enough to wait for at least two years after the period of bankruptcy before getting a mortgage usually experience less problems with their applications. They also pay average interest rates and receive 100% financing.

If you simply cannot wait for two years, you can look for lenders who offer loans even before the prescribed time window. These kinds of mortgage plans are offered with high interest rates and chunky down payments. Check if you can shoulder such expenses before finalizing your loan, or else you would say hello to bankruptcy once again.

Say you can and prove you can

It is now time to face your lenders and show them your capability to repay the loan you are requesting. Aside from submitting your credit records, you should also give them copies of your net income, debt-to-income ratio, pay slips, and other documents that would prove the change in your finances. Do not let your bankruptcy records overshadow your other good qualities. Show them of the high income you make because of being a hard worker, the significant development of your debt and income ratios, and any other proof that would convince them to approve your home loan.

After rebuilding your credit and fixing your finances, you would not need to fear the critical eyes of your lenders. Show them how much change you have made since the last time you declared bankruptcy.

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