How Getting a Bankruptcy Mortgage Works

When you dive into learning about getting a mortgage after bankruptcy it's easy to quickly become overwhelmed and give up completely. What you need to understand is how this system actually works. Don't start off looking at how things work with your particular financial history, first look at how getting a home loan works, and then factor this in.

Normally, when you go to apply for a mortgage, your lender is going to look at your down payment, your financial history, your income, and for signs of stability in your life. This is all still true for your circumstances. Sure, your financial history is a problem, and you're going to have special work to do in that area, but the basics are still the same. How getting a bankruptcy mortgage works is essentially the same as getting a home loan for anyone else, you just have to work a little harder to score well in these areas.

So, the down payment is important for everyone, but for your situation it pays to have a bigger one ready to go. Aim for at least a twenty percent down payment. This will show that you were able to save that much money, it will show the lender that you're serious, and it will mean you won't have to get private mortgage insurance. It will also, hopefully, help you obtain a better interest rate.

You're going to need to wait at least two years after filing bankruptcy to apply for a mortgage. This is okay though because you can use that time to build up your credit. You need a good credit card and loan history to apply for a bankruptcy mortgage. These are the two main types of payments that make up your credit history, so it's essential that you show you can handle it all.

A steady well paying job, and other signs of stability in your life. These can be staying at the same address for long periods and possibly some kind of community involvement and long standing accounts, like at your bank, will all help you out a bit.

Even if you have everything else listed here you're still going to have to address the issue of your bankruptcy. You've probably answered this question a million times by now—what got you into financial trouble in the first place? And now is going to be no exception. When you go to answer the question there are a few key things to keep in mind. First of all, be honest. It makes things a lot easier. The next thing is to keep things simple. Even though your situation was complicated, everyones is. You don't want to give a long and complicated answer. Keep your response short and broken down, keep it down to two or three sentences. If you have a hard time with this, first try and break it down to one word and go from there. Divorce? Credit cards? Natural disaster? Medical? Lost your job? And then expand that response to a two or three sentence story.

When you're getting a bankruptcy mortgage you want to be upfront, honest, and have a good recent financial history to show your potential lender.