Get a mortgage and home after bankruptcy

Usually if you have ever had to claim bankruptcy, something bad must have happened to you at one point during your life.

Luckily, we all get second chances to correct our financial burdens and become a home owner again.

But when you apply for a mortgage after you have claimed bankruptcy, be careful. There are many ways to take advantage of a borrower desperate for coverage.

Carrie Reeder wrote the article, “ Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy” on ezinearticles.com, which explains how to go about the mortgage process after a bankruptcy.

“If you have a recent bankruptcy on your credit and are looking to get financing for a home, there is hope. Buying a home with bad credit will just put more emphasis on the other two factors needed to get a mortgage loan, which are; income verification and a down payment.”

Most lenders will instruct you to wait at least two years from the time of the bankruptcy discharge before you apply for a mortgage loan. After the two year probation ends, you should easily be able to easily get financing.

As long as most of your payments have been reported to the credit bureau as having been paid on time since the discharge of your bankruptcy, you should be able to qualify for 100 percent financing.

“If you are looking to get a mortgage loan after bankruptcy sooner than the 2 years from the time of discharge, you will need to have almost flawless payment history since your bankruptcy discharge. Also, you may need to have a down payment. If you have even 3-5% to use as a down payment, that may be enough to help you get approved.”

There are several ways to afford a down payment even if you do not have the finances saved in the bank.

First, you should try to borrow or ask for a gift from relatives. Once the house is financed, you can eventually take out a 2nd or 3rd mortgage up to the full value of your house, which would then enable you to be able to repay the relatives.

Make sure to remember that if you use the money as a loan only from your relatives, you need to disclose that to the lender before you close. “Lenders usually have regulations about where the down payment is coming from and if you are not honest, it could be considered defrauding a lender.”

There are also several programs that can assist you in affording your down payment.

“There are down payment assistance programs like Neighborhood Gold or the Nehemiah program. These programs basically aid the seller in helping you with a down payment. Receiving a down payment from the seller of the property is illegal, but through these programs, it is legal. There are also other down payment assistance programs which are grants and do not need to be repaid or paid for by anyone. To find out about these, do a search on ‘down payment assistance’ with your favorite search engine.”

A third, more drastic way of managing to make a down payment is through cashing out your 401K or any other investment.

Take your time and be careful when applying for a mortgage after a bankruptcy. The last thing you want to do is get qualified for a mortgage only to default on payments and face bankruptcy again. This would most likely destroy your chances of ever owning a home alone.

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