Mortgage After Bankruptcy

     Obtaining a mortgage after a bankruptcy filing is not impossible, although the bankruptcy itself is now more difficult with the new bankruptcy law.  Bankruptcy filings, either Chapter 7 bankruptcy asset liquidation or Chapter 13 bankruptcy rescheduling and repayment leave a mark on the filer's credit report ten years for a Chapter 7 bankruptcy filing and seven years for a Chapter 13 bankruptcy filing.  It is imperative that the debtor rebuild his credit after the filing.  This can be easily accomplished by obtaining a credit card and paying it monthly to prove credit worthiness and reliability.  Joining a credit union or savings plan is another way to establish credit after a bankruptcy filing just as is obtaining and keeping current on a small loan helps re-establish credit.  All of these steps lead to the establishment of good or acceptable credit in the post-filing period and this should be one of the top priorities of the recent filer.

Obtaining a Mortgage After Bankruptcy

      Since bankruptcy filings do not remove secured debt, you want to make sure that these items are paid in a timely manner.  These items show up on your credit report and you want them to count in your favor in re-establishing your credit history.

How to Get a Mortgage After Bankruptcy

     If the former debtor has done these things, obtaining a mortgage loan should not be a problem.  One of the most important factor mortgage lenders look at is the debt to income ratio.  Debt constitutes what percentage or how much of your income.   You want your debt to income ratio to be as low as possible. The recent filer must check his credit report to be sure than the items discharged or covered by the bankruptcy have been removed and are not showing up as current debt.  If they haven't been removed their existence leads to a higher debt to income ratio.  The ratio has to be within the parameters of the mortgage lender in order for the recent filer to qualify for a mortgage after bankruptcy.  So even if the individual has filed for bankruptcy in the past, if he has re-established credit and has an acceptable debt to income ratio, he should have no problems obtaining a mortgage loan.  Studies have shown that within one-and-one-half to two years, this is the case for most filers of bankruptcy.  They have proven their creditworthiness, have good debt to income numbers and qualify for mortgage loans just as other entities do.

     There are lending institutions that cater to this niche in the market and are more than willing to make loans to people with bad credit, even in the immediate period after a bankruptcy filing.  Sometimes there has to be some sort of guarantee or co-signer. The borrower should execute caution in dealing with these firms and check them out as they normally would, but a little checking around reveals that lending institutions are out there for post-bankruptcy filers, so you can get a mortgage after bankruptcy.

     Bankruptcy filings are not the end of the world.  Obtaining credit, including mortgages, may be a little difficult, but not impossible if you know where to look, you can get a mortgage after bankruptcy.