January 25, 2013 /24-7PressRelease/
-- Getting a mortgage loan after bankruptcy
Even after filing bankruptcy, a person may still be eligible to be approved for a mortgage loan. A record of the bankruptcy can remain on the filer's credit report for up to 10 years. Although many people believe the myth that they will never be able to obtain a mortgage after filing bankruptcy, in reality, filers can be approved for mortgage in as little as one year after a bankruptcy.
A mortgage loan can be approved in as little as one year after bankruptcy
The amount of time it takes for someone who filed bankruptcy to become eligible for a mortgage loan depends on several factors, including the type of bankruptcy that was filed and the type of mortgage loan being applied for. If a person filed Chapter 7 bankruptcy, then the filer may qualify for a mortgage loan insured by the Federal Housing Administration (the FHA) or by the Department of Veteran Affairs (the VA) in two years from the date of the bankruptcy discharge. For a loan not insured by the FHA or the VA, Chapter 7 filers may qualify in two years.
If a person filed a Chapter 13 bankruptcy, then the filer may qualify for a FHA or VA loan in as little as one year, and for non-FHA and non-VA loans in two years.
Further, regardless of the type of bankruptcy a person declared, a lender can make an exception and approve an FHA or VA loan earlier if the filer demonstrates the existence of extenuating circumstances.
People with low credit scores may still qualify for government-insured mortgage loans
Some lenders may approve FHA or VA loans for individuals with credit scores as low as 620 or 640. Moreover, for non-governmental loans, borrowers with a score of 740 or higher may enjoy the lowest interest rate.
The impact of filing bankruptcy on a person's credit score will become weaker as time passes. In addition, there are steps people can take to rebuild their credit scores after a bankruptcy.
Pay bills on time
According to a mortgage lending service, before approving someone for a mortgage the lender must see at least 12 months of consistent payments for the utilities and rent. Credit bureaus may also be tracking rent payments, so paying consistently can help improve a credit score.
Be careful when asking companies to report on-time payments
Some companies like telecommunications, cable and utilities companies might report a person's on-time payment history to the credit bureaus if they are asked to. On-time history may improve the person's credit score. However, the drawback of requesting this is that if a consumer asks the companies to do so, they will probably report his or her late payment and non-payment history to the bureaus as well, which hurts the credit score.
Check credit reports periodically
Prospective loan applicants should check their credit reports periodically from all three credit bureaus, which include Experian, Equifax and Transunion. If there is any error on the report, it is important to notify the bureaus so that it can be corrected or deleted. Bureaus need to either respond or remove errors within 30 days.
Get a secured credit card
After bankruptcy, it may be a good idea to start rebuilding a credit history by obtaining a secured credit card. With a secured credit card, a consumer pays a deposit as collateral at the outset. The bank will then extend credit to the consumer limited by the amount of the deposit. It is a good idea to choose to open a secured credit card that reports to credit bureaus. Some of companies that offer secured credit cards do not report the payment history to the bureaus.
If you are contemplating bankruptcy and would like to know more about how it will affect your financial future, it is a good idea to consult with a bankruptcy attorney for more information.
Article provided by The Troglin Firm, P.C.
Visit us at http://www.troglinlawoffices.com---
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