Mortgage After Bankruptcy

Bankruptcy is the financial version of an atomic bomb. It is just about as bad as it can get for your credit report, which is why it is the port of last resort for people with financial problems. Once you declare bankruptcy, your past debts might be erased, but you can forget about getting the basic credit you need to accomplish even the most simple of life’s tasks – or at least that is what most people think. The truth of the matter is that despite how bad and scary a bankruptcy can be that there is indeed life after bankruptcy. Your credit report will bounce back faster than you might imagine and soon loans and credit cards will be available to you again. Contrary to what you might imagine, getting a mortgage after bankruptcy is one of the easiest kinds of loans to secure. Getting a mortgage after bankruptcy and foreclosure is entirely within your reach, but that doesn’t always mean it is the best idea.

To the shock of most people who file for bankruptcy, you can get a mortgage after bankruptcy discharge almost immediately. In fact, in some cases, lenders won’t even make you wait for the discharge – you can get a loan before your bankruptcy case is even settled. These mortgages don’t come cheap, however. Some of them have interest rates over 15%, which could lead you into financial hot water again pretty quickly. Even though you can technically find a lender, usually called a B-C-D lender, to give you money after your bankruptcy, getting a mortgage then might not be the best idea for re-establishing your credit. What is usually though to be a better bet is a FHA mortgage after bankruptcy. While you can’t cash in on one of these low credit rating loans until about two years after you declare your bankruptcy, you will usually only have to pay half a percentage point about a standard mortgage for these loans. These loans, subsidized by the federal government, give you a chance to re-establish yourself and get back on your feet without digging yourself deeper and deeper into debt.

After bankruptcy mortgage refinancing a few years down the line after your bankruptcy is a must. As your credit improves, you will be eligible for a better interest rate on your loans, and as such will lower your monthly payment.