Getting A Mortgage Explained

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Mortgage is a loan taken by a borrower in the security of the properties having assets of same value or more, such as home, land etc. Being punctual in paying off the loan at regular interval is very important. For bankrupt people, it is even more difficult to pay the loan on time. Therefore, banks generally do not prefer bankrupt people for mortgage. However, getting a mortgage after bankruptcy is not as difficult as you think. Many lenders are ready to give mortgage to the people who have either bad credit or have gone bankrupt.

You have to be well aware of how to get mortgage after filing for bankruptcy. Depending on your circumstances, you may get a mortgage soon. But, it is not advisable to apply for loan for at least 18 months after filing for bankruptcy. Getting a mortgage after bankruptcy depends on various other aspects that are taken into account during your application for mortgage. Getting mortgage depends on the amount of money you can deposit and your guaranteed income. In short, success will depend on your ability to provide both of these things.

Many lenders are not ready to give mortgage to a bankrupt person for at least two years since bankruptcy discharge. As the initial procedure, you have to manage all your debts correctly from the time of bankruptcy discharge is declared. You should pay off loans for your home or car that were not discharged in bankruptcy. The chance of getting mortgage after bankruptcy depends upon your deposit on the house. The more you can put down on the house as a deposit, the more chance you have to get a mortgage.

A 3-5% deposit is enough to help you to get the loan. If you want a mortgage after bankruptcy, try to limit the amount of further debts like bank loans and credit cards. The mortgage lenders always check your debt-to-income ratio and so it is advisable to reduce further debts as much as possible. The information on your credit report may not be correct always and should be checked for accuracy. Remember, that any wrong information on your credit report reduces the chance of getting mortgage.

You can request for the copy of a credit report through credit reporting agencies or credit monitoring companies and report if any mistake is found. It helps you to establish a favorable debt-to-income ratio. Lenders, brokers and are the main three organizers that help you to get a mortgage after bankruptcy. Brokers are specialized in getting mortgage after bankruptcy. They have access to many mortgage companies and so they can help you to choose the best mortgage that suits to your circumstances. The also assist you with advice in the application process.

Introducers also do a similar job as brokers. But, they do not advice the borrowers. Introducers recognize that you need a mortgage now and introduce you to a lender or broker. But, in some cases, it is better to apply for a mortgage directly to a lender. Very few people are lucky enough to get pre-approved mortgage in these times of credit uncertainty. So if you have pre-qualified for a mortgage loan, I insist that you use it to the best of your ability, right away.

A lot of people tend to confuse between pre-qualified and pre-approved mortgage. So here’s an article which will help you understand the two things. The difference isn’t too big and only a matter of that one extra step. A person is said to have pre-qualified for a mortgage when he clears a particular criteria set by the Federal Housing Authority (FHA). When such a person who has pre-qualified for a mortgage goes and gets his financial status approved by the required authority, then he is said to be pre-approved for a loan.

So, as you can see, the difference between pre-qualified and pre-approved mortgage is only about getting the approval from the mortgage companies that your credit is just perfect. So let us now see th
e first step i.e. pre-approval, the pre-qualification. Steady employment history is a must in order to pre-qualify for a mortgage. You need to have worked with the same employer for at least 2 years. The second criterion for pre-qualifying for a loan is having a steady or increasing income for the past two years.

Your income is important because that helps determine the amount of the loan you pre-qualify for. Your credit report again needs to show a good performance on your past credit. There should not be more than 2 thirty-day late payments on any forms of debt over the past 2 years. Getting your mortgage pre-approved with bad credit is not really possible. People who have been through bankruptcy can rejoice as by showing steady improvements over the past 2 years on your credit score, you become eligible for pre-approved mortgage.

People who have been through foreclosure too can pre-qualify for a mortgage, 3 years post the completion of the foreclosure process. Finally, the last criterion for the pre-qualification process is the average monthly income. The amount paid towards mortgage payments is typically 30% of the monthly income.Pre-Approved Mortgage. It goes, like I mentioned before, one step ahead from pre-qualification. What you need to do here is to take a copy of all the financial documents that prove that your financial position is good enough, as decided by the pre-qualification requirements above and attach them to the application form.

You send the application to the concerned authority and then wait for their reply. They might ask you to come for an interview later and discuss the documents with you to check if everything is in order. If everything is in order, then your loan is said to be pre-approved. Now what is the big deal about pre-approval anyway? Pre-approval means that you instantly qualify for a loan and cannot be refused the amount you qualify for under any circumstances, should you clear all the requirement criteria.


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