How To Get A Mortgage After Filing Bankruptcy
Many people assume that it is virtually impossible to obtain a home loan once you have filed bankruptcy. It is a difficult process but not an impossible one. The main steps to securing a mortgage after filing bankruptcy are; waiting, making sure that your credit accounts appear as discharged in the bankruptcy on your credit reports, rebuilding your credit and maintaining steady employment.
If you have are making payments on a Chapter 13 bankruptcy you will be eligible for a FHA Loan if you have been making timely payments for over a year. If you filed a Chapter 7 you will need to wait at least two years after the discharge date before becoming eligible. Remember that the filing date is different than the discharge date.
The first step towards cleaning up your credit is to ensure that accounts appear as included in bankruptcy on your credit reports with each of the three agencies. This is preferable to accounts showing late payments or appearing in collection or as charge-offs.. You can do so by filing a dispute with each of the three agencies and sending each agency a copy of your discharge papers itemizing which accounts were included with the bankruptcy. You may file a dispute by fax, snail mail or via telephone. It may seem very challenging to obtain a mortgage after bankruptcy but with time and proper planning, anything is possible. The bureaus have by law thirty days to investigate the claim once they receive your documentation and will send you a corrected report once their investigation has ended.
It is also important to re-establish your credit rating. If you have current accounts in good standing it will be imperative to make the monthly payments on a timely basis. If you do not have any accounts in good standing then you can open a few secured credit cards. Make sure that the issuing bank of those secured cards report to the three agencies before you apply, otherwise it won’t have an effect on your credit. In order to rebuild your credit, you will need to have both installment and revolving accounts which are in good standing. Revolving accounts are credit card accounts while example of installment loans are vehicle and student loans. It is important not to apply for too much credit at one time since excessive inquiries can affect your score negatively.
Mortgage lenders prefer to see at least two years of employment with the same employer. This shows stability and the ability to pay. It is also vital to keep your employment within the same field or line or work. Keep all your check stubs and tax returns in a location that is easily accessible in case the lender needs to review them.
It may seem virtually impossible to obtain a mortgage after bankruptcy but with time and proper planning, anything is possible. It is suggested that you utilize the waiting period (between a bankruptcy filing and mortgage application) to rebuild your credit, correct errors on your credit report and maintain steady employment. With time and proper planning it is possible to obtain your own house even after filing bankruptcy.
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