Getting a Mortgage after Bankruptcy: Small, Sure Steps

2007-03-08 10:33:40

( Financial )



LIFE AFTER BANKRUPTCY

Getting a mortgage after bankruptcy is seen by many as an unattainable task. After all, who would want to lend money to someone who has just been through a financial misfortune? But getting a mortgage after bankruptcy to purchase a new home is not really that difficult, especially in light of the fact that a mortgage loan is generally perceived by banks and other lending institutions as low risk.

The reality is that is that while it is general practice for lenders to accommodate loan applications two years after filing for bankruptcy, some are willing to extend mortgage loans after bankruptcy without any waiting period at all.

SECURED AND UNSECURED

By its very nature, mortgage loans after bankruptcy are no different from any other secured loan. A secured loan is premised on the concept of collateral. Regardless of your credit standing, you cannot be approved for a secured loan without having your own asset or property to act as guarantee for the loan being taken. Whether you have been bankrupt or not, as long as you can put up the required collateral, then you have a good shot at getting approved for refinancing after bankruptcy.

Of course, it is a totally different case with unsecured loans. Unsecured loan companies generally award loans by virtue of one’s financial credibility. Because there is no collateral or security involved, unsecured loan companies will evaluate your ability to pay the unsecured debt based on your overall credit standing. From this they will make their decision whether to issue the loan or not. Common sense would dictate that getting an unsecured loan right after bankruptcy would be very difficult and is not recommended.

One sure way to get refinancing after bankruptcy is to start small - establish a new and better credit reputation by paying your bills on time. If you have an asset or some savings left, get a secured loan like a secured credit card and pay the dues promptly. From there, getting a mortgage after bankruptcy will not be a problem at all.


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