Yes, it is possible to get a mortgage loan after bankruptcy and getting one may be one of the best options to help you rebuild your credit. However, before applying for one, there are a few things you should do first.
The first thing to do is to clean up all three of your “Big Three” credit reports, those issued by Equifax, Experian and TransUnion. Although many of your debts may have been discharged by the bankruptcy court, it is up to you to clean up your credit report, do not expect the credit bureaus to take the initiative in this respect. Get copies of all three of your credit reports and submit documentation to each agency detailing each of the discharged debts with documentation to have them removed from your credit report.
The next step is to pay off those debts that were not discharged by the bankruptcy. Most commonly these include student loans, but there are several different types of debt that may not be discharged and you should use these debts to build up your credit score. Paying back debts still owed from before the bankruptcy in a timely fashion and paying more than the minimum amount will begin rebuilding your credit almost immediately.
Similarly, you may also was to go ahead and get a secured credit card, or a credit card whose available balance is determined by the amount of money you have deposit with them. This is not what most people consider a “real” credit since you already have the cash available, but using a secured credit card, paying off your balances monthly and in a timely fashion also helps you rebuild your credit quickly. This is quite simply the easiest after bankruptcy credit card to get.Many of these secured credit cards also convert into unsecured ones after a year or eighteen months, so getting one or more of these cards and treating them responsibly puts you on the fast track to getting “real” unsecured credit again.
Once the above is finished, you can begin looking at getting a mortgage. Most people can get an extremely high rate mortgage loan as soon as six months after a bankruptcy. However, the borrower will pay a lot more for one of these loans; they will require a large down payment and the term will be short. (These are called hard money loans.)
It is more prudent to wait until you qualify and then apply for a Federal Housing Authority (FHA) mortgage. Assuming you have maintained excellent credit since the bankruptcy, you can apply for FHA mortgage loans after bankruptcy once two years have passed since your discharge.
Whether you go with the FHA or a private lender, it is important to get a home mortgage after bankruptcy that you can actually afford. Most people that have filed for bankruptcy got themselves in that situation by borrowing more than they could realistically pay back, so it is essential to avoid doing this a second time. Before applying for mortgages after bankruptcy, you should carefully gauge what you need and determine whether or not you can realistically afford it. You don’t want to need bankruptcy help again!
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