If you're considering a home purchase, but have had some credit missteps in the past, fret not. This guide will show you all of your options for getting a mortgage after bankruptcy and foreclosure. Whether you want to invest or buy a new property, we'll walk you through the steps of what's required before and after receiving your mortgage. Let's get started!
So there are two things that can make someone ineligible for a mortgage: Bankruptcy and foreclosure. These two things are pretty self-explanatory — they're two ways that people can lose control over their finances and may wind up owing more than they own. In the U.S. you can lose your home in one of two ways: Bankruptcy or foreclosure.
Why is this important?
Well, if you've had to file bankruptcy, it's probably a good idea to know exactly what procedures you'll have to go through in order to receive a mortgage once you're out of the Chapter 13 process. Here are the three steps that borrowers will have to go through:
(1) Filling out forms
(2) Applying for a mortgage
(3) Paying off the loan via monthly payments
If you're still in the Chapter 13 process, this is all very simple. What you want to do is get the lender's name and your attorney's name, and make sure that the lender knows that you're in a repayment plan.
Also, sometimes lenders will require that you get a letter of recommendation from your attorney before they give you a mortgage after bankruptcy or foreclosure. The same thing goes for foreclosure. Either way, make sure to let your lender know if any of this is applicable to you so they can easily fix the problem.
Paying off a mortgage can be tough. In some cases, borrowers are left with nowhere to turn — except for their parents or loved ones — if they don't have the cash on hand necessary to pay off the loan. That's why being able to get a mortgage after bankruptcy or foreclosure is extremely important.
Why You Need a Mortgage After Bankruptcy and Foreclosure
Getting a mortgage that allows you to pay off the loan over time is very attractive. Not only is it better for your credit, but it also saves you money in interest payments because you'll be paying off your loan faster. Furthermore, if you have one of those automatic payments (like an auto loan), then it will save money on certain fees associated with the payment method. There are thousands of people using this strategy each year, so there is no reason why homeowners shouldn't be able to take advantage of it.
Things to Consider Before Applying for a Mortgage After Bankruptcy and Foreclosure
Before you go ahead and send in an application for a mortgage after bankruptcy or foreclosure, you need to do some careful planning. For one thing, if you don't already have a house that you want to purchase, then you need to find one that works for your budget. This means looking at the price of the home along with how much money you'll have available on a monthly basis to pay off the mortgage.
You also need to consider whether there will be someone else helping with the mortgage payments — like a parent or family member who will guarantee your loan. If so, talk to them about it before going through with anything.
Step by Step Guide on How to Get a Mortgage After Bankruptcy and Foreclosure
The first step is to fill out the appropriate forms. Never assume that the mortgage lender won't request some information from you — especially if you're filing for Chapter 13 bankruptcy. This is one of the parts of the process where mistakes can be easily made. Make sure that you research it first. Whatever papers you need to complete will be mailed to your doorstep, so make sure you have everything ready beforehand.
Once your paperwork is done, head to the lender's office (or another location) and submit your application. The next step will be a personal interview where you'll meet with a representative from the company that you applied with and find out whether or not you're approved for your mortgage. If not, it will be at this point that you'll get the chance to correct any errors that were made during the loan application process.
If everything goes smoothly, your loan should be approved. Then all that's left is for you to make sure that payments are made on time throughout the year and eventually pay off your loan in full. The goal here is to be debt-free, which is something that millions of people accomplish each year by using strategies like this.
What Is a High-Ratio Mortgage? How Can I Get One?
A high-ratio mortgage is generally the best option for borrowers who have good or excellent credit ratings. This type of mortgage is also known as a conforming loan. However, borrowers can apply for a high-ratio mortgage even if their credit rating is not so great. This type of loan will still be insured by the lender in some circumstances to protect the borrower in case they ever needed to file for bankruptcy.
How to apply for a high-ratio mortgage:
Go online, call a broker or speak directly with your lender. The first step is to call up your mortgage broker and ask them if they can find you the best deal on a high-ratio mortgage. You may also want to check online at sites such as Lending Tree where you can get quotes and compare rates from multiple lenders on one platform. You can compare rates and choose the one that suits you best. Call your lender and ask about what type of mortgage you can get for your budget, your income, and your credit score.
If you have a question or comment please leave it below. We'd love to hear from you!
