When a borrower is successfully approved for a bankruptcy claim there are a variety of things that occur; the harassing calls from creditors come to an end and much of their debt is eliminated under the most common type of filing, which is Chapter 7 bankruptcy. Of course, apart from some of the benefits that can be derived from claiming bankruptcy are also some less than desirable after-effects, the most notable being a severe impact to the borrower’s credit rating. This impact can last up to 10 years making it very difficult for the borrower to attain a decent line of credit or a home mortgage after bankruptcy. Notice that I didn’t say impossible. That’s because securing mortgages after bankruptcy is possible, particularly if the borrower is willing to put up with the higher interest rates and stricter terms that go along with these so-called high risk loans. Plus, as the borrower begins to build a history of on-time payments their interest rates will begin to decline over time.

Although it’s possible to obtain a mortgage after bankruptcy, there are some important details to point out. It’s important to point out that a buyer will need to wait up to 2 years before applying for a mortgage or before seeking an after bankruptcy mortgage refinance. The reason for this is that a borrower’s credit will need to be slowly rebuilt before they are even considered for a mortgage application. Along the same lines, it’s also critical that borrowers understand the importance of checking their credit report prior to applying for a mortgage post-bankruptcy. The borrower should check for any possible errors or debts that were carried over as part of the bankruptcy proceedings. Any debts that are listed incorrectly can be corrected by the borrower or through a bankruptcy service or credit repair agency. It’s important to note that any adjustment to your credit report will take several weeks to process, so be sure to take this into consideration before getting a mortgage after bankruptcy.

Apart from checking your credit report for errors, it’s also important that you don’t rush into the application process. Ideally, you will want to begin the credit repair process prior to seeking mortgage loans after bankruptcy. This can be made possible through the use of a secured credit card, which is essentially a credit card that is backed by a cash collateral deposit. What this means is that if a borrower places $1,000 toward their account that they could charge up to $1,000. Even though the borrower is essentially trading their own money back and forth, on-time payments can lead to positive impacts to their credit rating. Setting up some sort of installment debt can also be an effective way to help rebuild credit, though it will take some time before most borrowers can qualify for this type of option.

Bottom line – getting a mortgage loan after bankruptcy is possible though it will require that a borrower spend 24-36 months rebuilding their credit using the methods mentioned above. For more information on how to claim bankruptcy or for a discussion on the different types of bankruptcy, please feel free to browse through our site.

Click on the following link to learn how long does a bankruptcy stay on your credit report. You can also find information on renting after bankruptcy.