Mortgages After Bankruptcy

Getting a mortgage after a bankruptcy is not impossible. Although you may face some additional challenges than the traditional applicant, you are by no means banned from owning a home ever again. In fact, there are a few things you can do to set yourself apart and put your best foot forward towards a new mortgage after a bankruptcy discharge.

Time and Patience

One of the most overlooked aspects of applying for a mortgage after bankruptcy is patience. Most people attempt to secure new credit right away, which makes the process unnecessarily complicated.  Depending  on which type of bankruptcy you completed, you may find that waiting six months to a year or more can be highly beneficial. In general, you will have to wait longer after completing a Chapter 7 bankruptcy case than after a Chapter 13 case. The idea is to begin to rebuild your credit slowly and responsibly for several months before you attempt to apply for a secured debt such as a mortgage.

Organization and Documentation

One of your biggest assets when applying for a mortgage after a bankruptcy is documentation. You want to demonstrate your financial situation and recent credit history to your potential lender. Having a hardship letter or proof of factors that contributed to your financial trouble can be beneficial. If you lost a job, experienced a death or divorce or suffered a medical illness, this documentation can help prove you are a victim of unforeseen circumstances rather than an irresponsible borrower. Letters from previous creditors stating your debts have been paid or satisfied can also help prove your ability to responsibly maintain a new line of credit.