After filing for bankruptcy, getting authorised for a mortgage may prove to be a difficult and time-consuming procedure, but, it is not impossible. Even though they might have to deal with higher interest rates, more stringent loan requirements, and a more challenging application procedure, a person who has filed for bankruptcy might still be able to get approved for a mortgage.
In general, the higher the interest rate will be, the lower the credit score that was used to determine it. However, an individual with poor credit, having a bankruptcy on their credit history, can still be able to find a lender who is ready to deal with them and offer a rate that is on par with other borrowers. When looking for the finest bargain, it is necessary to shop and evaluate the interest rates offered by various lenders.
People who have filed for bankruptcy and are interested in obtaining a mortgage may also look into obtaining speciality mortgage products as an additional choice. There are financial institutions that are willing to extend mortgages to borrowers with bad credit rates, including those who have been through the process of declaring bankruptcy. Although the interest rates on these products might be higher than those on conventional mortgages, they might be more attractive than the rates that a conventional mortgage lender would provide to a borrower with a low credit score.
When compared to someone who filed for bankruptcy several years ago, borrowers who have just been discharged from bankruptcy have a better chance of having their mortgage application approved by a lending institution.
After filing for bankruptcy, one more thing a person can do to boost their chances of being accepted for a mortgage is to have a sizable down payment or a big amount of equity built up in their property. When determining whether or not a borrower is creditworthy, lenders frequently take this into consideration as a mitigating factor.
After filing for bankruptcy, your chances of being approved for a mortgage may be improved if you have a co-signer on loan. Co-signers are required for most mortgages. A person who signs the loan agreement with the borrower and shares equal responsibility for the loan’s repayment is called a co-signer. When applying for a mortgage, having a co-signer who has good credit can boost your chances of being approved for the loan, and it may also result in a reduced interest rate.
For instance, the waiting period for FHA loans may be as little as 12 months after the clearance of the bankruptcy, but the waiting period for conventional loans may be anywhere from 2-4 years.