Do you want to apply for a new mortgage after completing your bankruptcy filing? For many Americans, the relief brought by bankruptcy means not only leaving behind old financial baggage but also starting over with a clean slate.
If your version of starting over includes buying a home in the near future, though, you may wonder if you can qualify for a mortgage with a bankruptcy on your credit. The answer is yes, and here are a few things you can do to make it happen.
1. Know the Waiting Periods. While bankruptcy doesn't disappear from your actual credit report for between 7 and 10 years (depending on the chapter filed), the waiting period before applying for a mortgage is much smaller. Generally, you can apply for loans in as little as one to two years. Even though that black mark remains, lenders are open to the idea of a new mortgage.
2. Apply Extenuating Circumstances. Did you know that you may be able to apply for a new mortgage even earlier than the standard waiting periods? An exemption for extenuating circumstances could cut your waiting period to one year for many loans. So, consider whether any extenuating circumstances — such as divorce, job loss, serious illness, or the passing of a spouse — may apply.
3. Fix Other Credit Issues. By the time most people reach the point of filing bankruptcy, they've already struggled with numerous debt issues. So take some time to focus on fixing your credit history of everything except the bankruptcy. Have errors removed, make sure discharged debts have been zeroed out, and have statute of limitations applied. Then, add some strategic new credit to your score, complete with timely payments and a solid history.
4. Choose the Right Mortgage. Decide which type of mortgages you want to target, then learn about their particular rules. For example, a conventional mortgage generally has more strict rules than a nonqualifying mortgage, which has no waiting period and is looser on credit scores. There is no right or wrong mortgage, but knowing your end goal helps you take the right moves to reach it.
5. Consult With a Pro. During your waiting period, take the time to meet with a professional lender. Lending rules change on a regular basis, so you want to make sure you're working with the most current information. They may also be able to help you learn about programs designed to help home buyers. And they can answer questions specific to your financial or bankruptcy situation.
Where to Start
Want to get started on your journey toward becoming a homeowner once more? Start by meeting with an experienced mortgage lender in your state today.
To learn more about mortgages, contact a business in Hinesville, GA.