How to Obtaining Mortgage After Bankruptcy

Obtaining a mortgage after bankruptcy is going to take at least twelve months, and possibly longer, because you must first rebuild your credit. Be very patient and careful during this process. Your largest single monthly expense after you have emerged from bankruptcy will likely be your rental payment, and it is absolutely essential that you make your rental payment on time for at least twelve months. Pay your rent with a check each month so that you can document your efforts. Likewise, it is essential for you to make all of your utility bill payments on time. Do not be late and do not miss a payment. You must show your mortgage lender that you can meet your monthly obligations in a timely fashion. You must also show your mortgage lender that you can handle credit properly. The best way to begin doing this is to find and obtain a secured credit card that you can charge small amounts against and repay promptly. Once your credit has been rebuilt, you will be ready to apply for a mortgage.

Instructions

1. Pay your rent and all of your household utility bills in a timely fashion for at least twelve months. Carefully document your achievement with canceled checks. Never miss a payment, and never be late.

2. Find and apply for a secured credit card. A secured credit card gives you a chance to prove yourself, and it is really more like a savings account than a traditional credit card. You send the credit card company a cash deposit, and they open for you a credit line equal to the amount you have deposited with them. You can shop online for a secured card, but chances are you will be receiving a number of opportunities for such a card in your mail box each week. People who have just recently emerged from bankruptcy are often targeted by companies offering secured cards.

3. Use your secured credit card to borrow small amounts and repay promptly as you continue to rebuild your credit.

4. Add further positive credit references. Some examples might include a revolving charge account at your local drugstore or hardware store. Again, never miss a payment and never be late.

5. Once your credit has been rebuilt, you are ready to begin applying for a mortgage loan.

Tips & Warnings

• Don't grab the first secured credit card that you discover. The interest rate will likely be fairly high on all of these cards, but make sure you do not pay an extremely high annual fee to go along with it.

• A mortgage company will approve you for a maximum loan amount, based upon your income. If the mortgage company is willing to approve you for $175,000, look for a house selling for a little less. Give yourself a margin in case unexpected expenses come up. Bankruptcy has given you a fresh start, you must safeguard it.