In today’s world, no one can afford to buy a home without applying for some kind of loan in the form of a mortgage. Mortgages are controlled by various lending companies which can include banks, credit unions, and even individuals. These parties make their money by charging interest on the loan.
A mortgage is the pledging of a property as a security for a mortgage loan. While a mortgage in itself is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed.
Because a mortgage revolves around the lending and repayment of money in order for lenders to make a profit, it is important that they loan to individuals who are as secure as possible; the general rule is that the more secure the individual as far as past and present money matters, the more money he or she will be lent. After all, the lender is taking a risk with his or her own funds, and will want them paid back.
The main way in which lenders will establish your security is by looking at your income and your past when it comes to credit. Most of the time this is all right, but what if you have filed for bankruptcy somewhere in the past? Will you still qualify for a mortgage?
How much time has passed?
The first thing you need to look at is how much time has passed since your bankruptcy file was discharged. Most sources recommend waiting for two years before applying for a mortgage after a bankruptcy has been discharged; this will give you enough time to recover your credit and re-establish a secure reputation. Here are some ways that you can do it.
Think small to start! You won’t be getting a million dollar loan approval two years after a personal bankruptcy. Instead, you will have to be satisfied with getting a smaller loan for a small house. If you are careful, though, you will probably be able to take advantage of equity and upgrade fairly quickly.
Start saving money. One thing that will really help you when it comes to getting a mortgage for a new home is to have some money saved for a down payment. While individuals no longer HAVE to put a down payment on a house in order to take ownership, it will demonstrate to lenders that you carefully shepherd your resources and have the ability to make money.
Re-establish your credit. Finally, you are going to have to prove to lenders that you can repay borrowed money, and the way to do that is by going through other lenders for smaller amounts. This means using lines of credit and credit cards, but of course make sure you can pay the borrowed money back every time!
So it is possible to get a mortgage after a bankruptcy, it will just take time and discipline to do so.