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Mortgage After Bankruptcy: Steps to Take Before You Apply
by R. Lawrence Anderson |
If you are planning to apply for a mortgage after bankruptcy, here are three steps you can take which could save you up to $1,000s in extra interest and other costs:
1) Increase your credit score
Before applying for a .. |
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If you are planning to apply for a mortgage after bankruptcy, here are three steps you can take which could save you up to $1,000s in extra interest and other costs:
1) Increase your credit score
Before applying for a mortgage after bankruptcy, you will want to make sure to increase your credit score. Increasing your credit score can help you in two ways: First, it can increase your chances of qualifying for a mortgage after bankruptcy. Secondly, if you increase your credit score enough, you may be able to get a lower interest rate on the loan.
In After Bankruptcy Credit Solutions I go into detail on nine strategies you can use to increase your credit score. For example, one way to increase your credit score is to correct or remove any inaccurate or obsolete information from your credit reports. Another strategy is to establish some new accounts and pay them in a timely manner.
2) Come up with a budget
Before you even consider applying for a mortgage after bankruptcy, you will want to have clear picture of your current financial situation. For example, you will want to know how much you're making and spending every month.
You will also want to know how much of a monthly payment you can afford if you have a mortgage after bankruptcy. For example, most lenders don't like to see an individual spend more than 28% of their gross on the mortgage - but that's a general rule, each lender will have specific criteria.
In addition to the payment on your mortgage after bankruptcy, you will also need to budget utilities, homeowners insurance, maintenance, property taxes, etc.
Another item you will need to budget for, if you plan to apply for a mortgage after bankruptcy, is the down payment and closing costs. In addition to the down payment, closing costs alone can run thousands of dollars.
Fortunately, there are ways to reduce, or even eliminate, the money you have to out of pocket for a down payment or closing costs - but that's another article in itself.
3) Find an experienced mortgage broker
Once you've increased your credit score, and have a clear picture of your home buying budget, you will want to find an experienced mortgage broker. Why? If you plan on applying for a mortgage after bankruptcy, you will want an experienced professional on your side guiding you though the process.
How do you find an experienced mortgage broker? You can ask friends,
family, or any real estate agents you know. Once you have the names of some mortgage brokers, you will want to interview each one.
I list a number of important questions to ask them in After Bankruptcy Credit Solutions, but I will limit it two as I cannot cover them all here. Among other questions, you will want to know if they have successfully been able to get other individuals a mortgage after bankruptcy. You also want to make sure they are licensed.
Another important question you will want to ask is what type mortgage after bankruptcy (A, B, C, or D) the mortgage broker thinks you can qualify for. This is important. Why? The lower the grade the higher the interest rate you will pay.
In this article, we touched on three steps you can take before applying for a mortgage after bankruptcy - steps that could save you up to $1,000s in interest and other costs!
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Copyright © 2006 Innovative Solutions Publishing, Inc. All rights reserved.
DISCLAIMER:
This information is designed to provide only a general overview of the subject matter herein.
This information is provided with the understanding that neither the publisher nor author is engaged in rendering legal, accounting or other professional advice. If legal or other expert assistance is required, the services of a professional should be sought.
Neither the publisher nor author shall be liable for any loss or damages, including but not limited to special, consequential, incidental or other damages, caused by the information contained herein.
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