Bankruptcy can be devastating to your personal finances; however, it is the first step to getting yourself back on track. Remember that bankruptcy isn’t forever; the day after your bankruptcy closes you can start rebuilding your credit and qualify for a mortgage loan.
The first thing you need to do after your bankruptcy is final is establish credit. Open a small credit card account and maintain a low balance. The most important aspect of building credit is to make all of your payments on time and be responsible with your newly established credit accounts. If you have a significant amount of equity in your home you can use a home equity loan to establish credit. Home equity loans are easier to qualify for because the loan is secured by your home.
Preparing Your Mortgage Application
Mortgage lenders will accept your application as soon as your bankruptcy is finalized; however, you will pay more in fees and interest rates than if you waited. In as little as six months time you can build up enough credit to qualify for better interest rates and fees. During this six month period you can improve your financial situation by making all of your payments on time and using credit responsibly.
Comparison Shop For the Best Mortgage Loan
When you are ready to begin applying for home equity loans after bankruptcy, you will want to comparison shop before you accept any loan offers. Do your research and get interest rate quotes from a variety of mortgage lenders and brokers. You can learn more about your mortgage options, including common homeowner mistakes to avoid by registering for our free mortgage guidebook.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
