Bankruptcy in the country is not that unusual anymore but it still does carry a stigma with most people for whatever reason. People and businesses who filed for bankruptcy are often tagged as irresponsible, dishonest or lazy and these stigmas often leads to hopelessness and shame to people who declared bankruptcy.
But it is not the end of the world, there is definitely life after bankruptcy and yes you will be able to apply for a home mortgage loan. Of course it won’t be that easy but it is also not impossible. Do not think that the only way to get a mortgage after bankruptcy is to pay a high price because not all lending companies have the same loan programs to offer. Be sure to shop around to find the best.
So how does it work? Well, your bankruptcy status should be discharged first by the court then you can start cleaning up your credit record and rebuilding your shattered credit standing. Pull up your credit report and then review, if you find false information in it then start disputing to have it cleared.
Research, research, research, this will help you find lending companies that have loan programs available for low-income and bad-credit borrowers. Actually it will take about 4 years for you to obtain a conventional mortgage in case you plan to purchase a home but it will only take a 2 year waiting period if you wish to obtain a loan through FHA. There are also lending companies out there who will help you with your mortgage just six months after bankruptcy but will ask you to pay a very large down payment as much as 30% and will be charging you with sky high interest rates.
While the FHA or the Federal Housing Administration loan program could greatly help you because it does not follow the conventional and stricter Fannie Mae standards. All you need is a credit score of at least 580 but if it is lower than that then you will be required to pay 10 percent down payment; it could either be in the form of gifts, grants from relatives, borrowed money, charities or from non-profit organizations.
You may also get a co-signer or a co-maker to support your loan. Your co-signer should have good credit standing and his financial status should be in great shape but your co-signer should also be aware that they will have to take responsibility of mortgage payment and could possibly hurt their credit standing in case you default on your loan.
But if you have the money, you may just have to pay a bigger down payment to get a mortgage approval. Not only would be paying a large down payment increase your chances of approval but it will also allow lenders to give you a lower interest rate and you get to build your equity faster. Making a large down payment signifies your commitment to the mortgage and to the property and you will be valued by the lender thus putting you in a better position to negotiate.
There are actually a lot of things you can do to obtain a loan mortgage after bankruptcy and that is to jump-start your good financial status. Pay all your debts, be it your credit card, student loan, and other remaining debts and paying them on time will also help improve your credit report. If you manage your finances well then in no time you’ll be back on the right financial track.
Author Bio: Georges Kfoury is the founder and Chief Executive Officer of Leaderscorp Financial Inc. headquartered in Rancho Cucamonga, CA, a leading provider of mortgage financing dedicated towards providing affordable home loans. He founded the company way back 2003 from a ground level, without having the mortgage background. In spite of this, he was able to immediately take the company a level of generating annual income ranging from 8 to 10 million dollars.