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How To Apply For A Mortgage After Bankruptcy

How To Apply For A Mortgage After Bankruptcy

Why me?

Having bankruptcy on your financial record can often feel like you’re wearing the scarlet letter when it comes to filing for a mortgage. However, mortgage brokers are here to help. While a previous bankruptcy can cause its fair share of hiccups in your mortgage application, there are steps you can take in order to become a homeowner, despite past financial turmoil. Let’s take a look at how you can prepare yourself for a mortgage application after bankruptcy.

Find The Right Broker

The truth of the matter is that not all mortgage brokers will take on clients with a history of bankruptcy on their financial record, so it goes without saying that a little searching around is in order. Not only does this kind of investigative searching let you find a broker, but it can also help you find the right broker. Try to find a broker who has dealt with bankruptcy clients before and has experience in the tricky roadblocks which may be headed your way. We understand that bad things happen to good people, and try to be as understanding as we can when it comes to finding the best possible mortgage agreement for you. You should never feel judged, pressured or less welcome by your broker than any other client.

Give It Time

After a huge financial meltdown like declaring bankruptcy, jumping into home ownership can be a big step. Once you’re a little more back on track, work on rebuilding your credit and financial record and give it a few years before you apply for a mortgage. Generally, mortgage brokers require you to wait at least until your discharge is at least two years behind you, but we suggest to wait more in the realm of 5 years so that you can be viewed with a cleaner slate. This added time allows you more time to recuperate your credit, build a little financial stability and save for your down payment.

Never Conceal Information

The worst thing you can do when trying to secure a mortgage loan is to hide things from your mortgage broker. While you can’t hide your credit score or financial standing, it’s very important for you to disclose all information pertaining to your bankruptcy, including the reasoning. While this might make you feel embarrassed or uncomfortable, believe it or not, this information can actually work in your favour. Depending on the reasoning and specifications of your bankruptcy, your broker will be able to better tailor a mortgage rate and agreement for you.

Be Prepared For More Down

While it probably comes as no shock, mortgage candidates with a history of bankruptcy do make financial lenders a little more leery than those without. Therefore, when it comes time to buy a home, they might require you to have a larger down payment. Typically, the minimum down payment is 5%, however, those with a black mark of bankruptcy on their record may be required to have a minimum of 20% down for their home purchase.

Show Your Entire History

As mentioned previously, concealing information is never a good idea, especially when it comes to your credit history. In fact, the longer the credit history you can provide, the more it can work in your favour. A lengthy credit history can help identify where you ran into financial turmoil, and can also help to show any improvements you’ve been making. Having a clear record prior to your bankruptcy and improvement thereafter can be very appealing to a financial lender when it comes time to apply for a mortgage.

Your Rates Will Change

Much like your minimum down payment, your fees and interest rates can be expected to be adjusted due to your bankruptcy. Typically, a financial lender will raise your rates accordingly, however, factors such a good credit and time discharged can lead to lowered rates. While a raised rate is at the discretion of the lender, the possibility is definitely a hurdle you should be prepared to face when applying for a mortgage after bankruptcy.

Your mortgage broker should always be there to help you better understand your options and how to overcome the hurdles of buying a home after bankruptcy. You should always feel comfortable to ask for help or to have your options better explained to you by your broker. If you have any questions or concerns about applying for a mortgage after bankruptcy, please don’t hesitate to give me a call at 705 -315-0516. I am always dedicated to helping you and your family finance your home with the best possible agreement.

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