Obtaining a mortgage after bankruptcy can occur more quickly when debtors engage in credit repair strategies. Those who succeed at improving credit scores might be able to qualify for a mortgage loan within two to three years. However, debtors must commit to paying bills on time each month and avoid taking on new credit obligations.
Qualifying for a mortgage after bankruptcy will be more difficult, as borrowers have a track record of not being a trustworthy creditor. Taking control of personal finances and demonstrating a favorable payment history can expedite the process.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) require debtors to engage in credit counseling as part of their bankruptcy agreement.
Debtors should take advantage of the financial education and develop a get out of debt plan; particularly if they want to buy a house in the near future. Petitioners are required to repay a portion of debts under Chapter 13 bankruptcy. They cannot apply for a home loan until restructured creditor debts are satisfied.
Many people enter into mortgage bankruptcy to stop foreclosure. When mortgagors lose property to foreclosure they may not qualify for bank financing for 5 years or more. Foreclosed property owners might want to research creative financing options such as lease purchase option agreements or owner will carry finance.
Debtors should keep detailed records of rent payments as most landlords do not report to credit bureaus. It is recommended to rent homes with payments equal to or slightly lower than the amount of mortgage payments you can afford. This helps establish a payment history to show you are capable of paying a specific amount.
Rent payments should be submitted via personal check. Keep records to show the amount paid and payment processing date. Tenants who do not have a personal checking account should obtain detailed receipts from their landlord that includes payment amount and date.
Banks generally require borrowers to have a checking account when applying for a mortgage loan. If checking accounts are denied because of outstanding checks or bank fees, measures must be taken to clear the debt.
Chex Systems, Inc. is the primary reporting system used by mortgage lenders. Being blacklisted by Chex Systems can make obtaining approval for mortgage after bankruptcy challenging. Consumers who do not qualify for checking accounts should order a copy of their Chex Systems report at ConsumerDebit.com. Steps can be taken to remove erroneous information.
Debtors engaging in credit repair should order a copy of credit reports from each of the credit bureaus. These include: Experian, Equifax, and Trans Union. Most creditors do not report to each agency, so credit reports will vary.
Consumers are entitled to one free report annually from AnnualCreditReport.com. This consumer agency was created by the three major credit bureaus and adheres to the Fair and Accurate Credit Transaction Act (FACT Act) guidelines.
It is not uncommon for debts discharged through bankruptcy to be reported incorrectly. Erroneous information has a negative impact on FICO scores, so it is important to be proactive and have information corrected.
Consumers can review sample creditor letters and instructions for disputing reported credit information via the Federal Trade Commission website at FTC.gov. Creditors are required by law to respond to disputes within 30 days. It can take up to 9 months for removal of erroneously reported information, so it is important to order credit reports soon after the bankruptcy process is completed.
Source: http://sharonjhall.com/qualify-for-mortgage-after-bankruptcy-by-improving-personal-finances
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