Subprime Mortgages And A Past Bankruptcy

Subprime Mortgages And a​ Past Bankruptcy
Even with a​ Chapter 7 bankruptcy in​ your credit report you​ can still qualify for a​ sub-prime mortgage .​
Once approved,​ you​ can then use your mortgage to​ improve your credit history,​ qualifying you​ for lower interest rates in​ the​ future.
The Effects of​ a​ Bankruptcy
A bankruptcy will affect your credit score based on​ how long ago it​ was .​
So a​ bankruptcy discharged less than a​ year ago will qualify you​ for a​ D loan .​
These types of​ loans usually require 30% down and a​ high interest rate.
By waiting a​ year after a​ bankruptcy,​ you​ can qualify for a​ B or​ C loan with their lower rates and down payment requirements .​
If you​ wait two years,​ you​ can qualify for a​ FHA home loan .​
In four years,​ you​ can qualify for a​ conventional loan.
Besides your bankruptcy record,​ financing companies will want to​ see a​ steady payment history .​
This includes your credit and rent payments .​
Cash reserves for six to​ twelve months will also offset your credit risk.
Search For Lenders
Not all sub-prime lenders evaluate borrowers the​ same way .​
So you​ may qualify for a​ B loan with one lender and a​ C lender with another .​
To find who will offer you​ the​ best financing,​ you​ will need to​ request quotes from several lenders.
You can request quotes over the​ phone or​ online .​
Online sites will provide a​ fairly accurate quote based on​ the​ generic information you​ provide .​
You can also use free mortgage broker sites which provide home loan quotes from several different financing companies.
Before you​ Apply
Before you​ apply for your mortgage,​ make sure that all accounts involved in​ your bankruptcy have been closed .​
You can request a​ copy of​ your credit report from the​ reporting agencies to​ check your information .​
You may also consider including a​ letter in​ your report explaining the​ circumstances of​ your bankruptcy .​
Some lenders will look more favorably on​ your account if​ illness or​ job loss affected your finances.
After Your Mortgage
Once you​ have purchased your home,​ plan on​ rebuilding your credit history by making regular payments .​
Within two years you​ may qualify for a​ conventional mortgage with low rates.

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