Getting a Mortgage after Having Declared Bankruptcy

Posted on: April 15th, 2015 by firstandsecondmortgages No Comments

Yes, you will be able to obtain a mortgage after declaring bankruptcy.

A mortgage is essentially a very large loan that you take out in order to buy a house. As with any loan, the lending party (usually a bank), will look at several factors in order to determine the amount of the loan you’re allowed and the interest rate you must pay on the loan, including your credit score, which they see as a reflection of how you manage your money.

Bankruptcy certainly affects your credit score, but it doesn’t destroy it so much that you cannot obtain a mortgage. However, you just might have to wait a bit of time, in order to rebuild your credit, after declaring bankruptcy before getting your mortgage.

It takes time to re-build your credit to “show” potential lenders that you will be responsible in handling the mortgage loan they give you. You should wait at least two years after discharging your bankruptcy to begin applying for a mortgage.

In the meantime, during this two year period, here are the steps to take if you want to obtain a mortgage after declaring bankruptcy:

(1) Discharge your bankruptcy; this means taking back full charge of your money and taking it out of the hands of any other party, like a credit counseling program.

(2) Evaluate your credit report and correct any errors you see (you can obtain one free credit report a year from reporting agencies like Experian).

(3) Rebuild your credit score by taking out small loans, through secured credit cards and installment loans, and paying them back each month in full. When you have done these steps, you can approach the bank to apply for a mortgage.

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