When you have a recent bankruptcy and mortgage is what you’re looking for you are probably aware that this will be harder for you than it typically is, but there are things you can do to make things easier for yourself. Having a claim in your past is actually fairly common so there is some protocol for this situation.
The first thing you’re going to want to know is that it will be very difficult for you to find a lender that will work with you before you hit the two year mark. This is ok, however, because in those two years you have the opportunity to build up your credit so that you’ll be offered a more reasonable interest rate.
Typically when you are looking to improve your credit you try and exercise your finances with credit cards and loans, but with your past bankruptcy and mortgage hopes in the future this becomes a little different, but the same principles apply. You want to have a positive history of using two different types of credit: revolving payments (credit cards) and installment (loans).
As soon as you can you want to get a secured credit card. You can get one of these at your current bank. Basically, you deposit a few hundred dollars into a savings account, which works as collateral on the card and sets your credit limit. You want to use less than thirty percent of your limit and pay if off each month in full. This will help build up your credit.
Six months to a year after this you want to try and get a small loan. This can for a car, tuition, whatever you need. You will be offered very high interest rates, but this will help you build up a history of on time monthly payments. If you have something to offer as collateral, such as real estate, a vehicle, or high priced collectible items you can lower your interest rates and make finding a loan considerably easier.
When you’ve got a bankruptcy and want a mortgage you need to work on improving your credit and building a history that will prove you can handle making monthly payments. Both of the above acts will help you show this so that lenders will trust you again.
Keep in mind that a home loan is long term, and in the future your credit will hopefully have improved quite a bit. In the future you may want to refinance your home for a lower interest rate. This will cost money up front, but you may find the lower rates to be worth it. The reason I mention this is that some loans have prepayment penalties that will make refinancing less desirable. I recommend looking at your loan terms and making sure you get a deal without a prepayment penalty to keep your options in the future open.
You’ll still have a hard time applying for a home loan, but this will make things much easier. You’ll want to have a one to two sentence simple explanation for why you ended up in trouble in the past and how things are different now. Remember that you can have a past bankruptcy and a mortgage in the future.