Mortgage Rate News

Many people who have filed for bankruptcy despair of being able to get a mortgage loan, or a second mortgage. This is because bankruptcy can be a stigma that remains on your credit report for quite some time (7 to 10 years) after the filing took place. However, it is possible to get a mortgage loan after bankruptcy. It is just a little harder. And, with many lenders tightening their standards due to the recent subprime lending crash, it could be even trickier to get a mortgage loan or a second mortgage. But it is still possible. An article on Banks.com offers insight into what to expect when applying for home mortgage loans after bankruptcy:

• You will likely only qualify for 80% financing, rather than 100%
• Your debt-to-income ratio will have to be between 45% and 50%
• Your interest rate will be higher than others’ mortgage interest rate
• A credit score of at least 500 is required

Before you look for a mortgage loan with a bankruptcy on your record, make sure you try to take steps to improve your credit score and research lenders. Different lenders offer different programs for bankruptcy loan programs. Not only do you want to compare lenders, but you want to shop around to find the program that will best fit your needs, and cater to your specific situation.

Also, you want to be able to get the best interest rate available to you, as well as ensure that you are financially fit as possible. This means that you should do your best to show that you have changed your credit habits, and that you are making progress toward improvement. You may want to prepare a statement of why you declared bankruptcy, and the circumstances leading to that. Some banks are more willing to work with you if your bankruptcy was brought on by something unforeseen, such as medical problems or loss of a job.

It is possible to get a mortgage loan after bankruptcy. However, you will have to show you are taking the steps toward becoming creditworthy again.