It is feasible to secure a mortgage after filing for bankruptcy, but you should be prepared to put in some more effort and be patient throughout the process. After bankruptcy, there are several things you may do to improve your chances of being approved for a mortgage, including the following:
- You may be required to wait a particular period of time before applying for a mortgage after filing for bankruptcy, and the amount of time required will vary depending on the type of bankruptcy you filed. For instance, if you file for bankruptcy under Chapter 7, you may be required to wait two years before applying for a mortgage, whereas if you file for bankruptcy under Chapter 13, you may only need to wait one year.
- Rebuilding your credit is an essential step to take after declaring bankruptcy, and you should give it your full attention. This can involve making on-time payments for all of your obligations, maintaining a low balance on each of your credit cards, and avoiding applying for any new credit.
- Be pre-approved for a mortgage. Before you start shopping for a home. This will give you a better sense of how much house you can afford. Both the process of purchasing a home and determining how much of one you can actually afford will be simplified as a result of this exercise.
- Consider applying for a mortgage for those with weak credit. These mortgages, often known as subprime mortgages, are designed specifically for people who have low credit scores. Although these mortgages often come with higher interest rates, it can be simpler to qualify for one of these loans.
This is due to the fact that creditors view borrowers with poor credit as being a greater risk, and they want to make up for that risk by charging higher interest rates to the borrowers they work with. However, the interest rates are subject to change based on the institution you work with and the kind of mortgage loan you want. It is essential to investigate a number of various lending options and make a thorough comparison of the interest rates offered by each.
It is essential to remember that a higher interest rate will result in greater monthly payments, and it is equally essential to plan one’s finances in such a way as to accommodate these higher payments. In addition, monitoring your credit score is a smart idea because doing so will assist you in the future in obtaining better interest rates.