Lenders always nitpick about small things that might blemish a credit report. The absolute worst blemish it could contain is a bankruptcy- which shows a lender that you may be poor at handling money. It won’t be impossible to convince them otherwise, but it won’t happen without a fight.
When you do decide that you want to try and get a mortgage after your bankruptcy, know that on average you should wait a year or two at the very least. A lot of lenders won’t even talk to borrowers who just got out of a bankruptcy, since they see it as poor responsibility that should teach the borrower a lesson in managing debt.
Sometimes mortgages are urgent. An example might be with a family that has since recovered from their financial woes, but still needs a home and can’t find a mortgage. This is the type of case in which a lender might offer a loan a bit sooner than usual. A mortgage obtained a year after a bankruptcy is possible, but you have to prove responsibility and show you learned from prior mistakes.
Don’t be saddened that you have to wait two years. Instead, think of it as a waiting period for you to build a deposit up. We all know that a larger deposit shows more commitment, which also leads to deflated interest rates. It does take around two years for the average deposit to be built with an entry-level salary. Just maintain a frugal living until that point in time comes where you can splurge for a house and property to call your own.
Having a cosigner will greatly help you in your plight. A cosigner that has a great credit rating, and agrees to be responsible if you can’t make payments, will tie lenders over who are still skeptical. Finding a cosigner is another story completely, as you will need to find someone that trusts that you have learned a lesson in managing money. Otherwise they will be liable for the cost of the mortgage.
Repair your credit when you are given the opportunity. As soon as you declare bankruptcy, start engaging in methods of smart living and paying bills off on time. It will take several years at the very least to get back on track and get somewhat-normal rates in interest and deposit minimums. Continue your good behavior and you will be able to apply for refinancing as your score continues to build.
In Conclusion
Banks are very skeptical of new ventures that are risky. This is especially true in the current economy, where banks are failing often and have to make smarter decisions on who to invest in. If you can reduce risk and prove a lesson learned, you shouldn’t have problems getting a new home loan.
Learn more about Bankruptcy Re Mortgage and Mortgage After Bankruptcy Advice.