Even a decade ago, bankruptcy and foreclosure were considered as very serious negative stigma. The blots of bankruptcy and foreclosure used to remain in your credit report for around 7 to 10 years. Homeowners who had to undergo this mortgage mess were treated like outcast. However, in the recent times, the personal as well as social stigma associated with these mortgages vices has somewhat been lessened. The difficult times that the national economy had to undergo in the late 2000s and the consequent housing market crisis have led to change in the general outlook towards bankruptcy and foreclosure. The increasing number of foreclosure cases have somewhat erased the stigma attached to it. Even after bankruptcy or foreclosure, not all your hopes of homeownership are dashed. If you adopt right steps to improve your situation, then you may be eligible to obtain a mortgage 3 years after foreclosure and 2 years after bankruptcy. Here, we provide some useful tips on how to qualify for a competitive mortgage after bankruptcy or foreclosure -
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First of all, you need to check out whether or not the foreclosure date has been accurately given in all your official records. In this regards, check out different official records such as your credit report, property deeds, property tax records, court foreclosure actions etc.
- After the bankruptcy discharge, you need to check out your credit report thoroughly. You need to ensure that all your debts have been closed and discharged. Even after bankruptcy discharge, if the creditors continue to report collections, your credit score is negatively hurt.
- Take out a secured credit card as soon as possible. Use that credit card wisely to give a boost to your credit score. Make small purchase by using that credit card and make regular payments on it. This will help you re-establish your credit score.
- You need to check out your credit report on a periodic basis. You need to check it for errors and recurrence of past debts. If the past debt is less than 7 years old, it can have a negative impact on your credit score. In that situation, you need to set up repayment arrangements so as to keep your credit score remain unscathed. It is recommended that in such situation, you should take the help of a reputable credit counseling agency.
- Once the usual waiting period is over and if you are confident that the you have a clean credit report, you can go for an FHA loan or a VA loan. However, while applying for a fresh loan, you will have to explain the reasons behind your financial hardships. You will also be required to explain the measures that you have taken to improve your financial situation. If the lender is satisfied, you may be offered a mortgage loan.
By following the above discussed tips, you can surely improve your chance of getting a new mortgage loan after bankruptcy or foreclosure.