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Three Quick Steps to Getting a Mortgage After Bankruptcy
By Chris Simons

Reprint Articles : http://www.lifesalary.com

Submitted By: Carrie Reeder

If you have a recent bankruptcy and are looking to buy a home, be careful of unethical or predatory lenders. Whether you are looking online or offline for a mortgage lender, it is becoming increasingly more common that subprime lenders are taking advantage of bad credit borrowers.

Many lenders will take advantage of borrowers with recent bankruptcies and bad credit because they know that the borrowers loan options are limited. Sometimes these lenders will charge excessively high fees, extensive pre-payment penalties on the home or ask for a fee upfront to "process" the loan.

Here are some tips on applying for a mortgage loan after a bankruptcy:

Beware of the Lender Asking For a Fee Upfront - Anytime you are applying for a mortgage loan, the only fee you should ever have to pay is the application fee which covers the cost of the lender pulling your credit application. Some lending scams involve asking for a processing fee of hundreds to thousands to process the loan.

Compare Loan Offers - If you can compare from 3-4 mortgage application quotes then you will know what to expect the current interest rate for subprime mortgage loans to be. If you accept the first mortgage loan offer you have, you may be paying a much higher interest rate than what is reasonable for your credit history.

Get Closing Costs in Writing - Brokers know that if a borrower has bad credit, they are most likely going to be more concerned about getting a reasonable interest rate and just getting approved than making sure they get normal closing costs. This is where many lenders will ding the borrower with credit problems. They will sometimes charge excessive closing cost fees. Get the list of closing costs in writing ahead of time and then do research online to make sure that the costs are reasonable. If the costs are not, go back to the lender and tell them that the closing costs are too high and you will not go through with the loan until they are lowered to be what is normal. The broker will usually comply, because they don't want the loan to fall through.

Submitted By: Carrie Reeder

After a bankruptcy is discharged, many lenders will offer you a home loan. In most cases, these lenders do not require new lines of credit or a high credit rating. Buying a home with good or fair credit has its advantages. These individuals likely obtain better mortgage rates and qualify for a range of home loans. Here are a few tips on ways to raise your credit score before applying for a mortgage.

Pay Creditors on Time

The habit you adopt for paying creditors can have a negative or positive effect on your credit report. If bills are regularly paid on time, your score will soar. Yet, paying a bill one day late may decrease your credit score by as much as 10 points.

If possible, pay bills a couple of days before the due date. Waiting until the due date to pay credit card bills will not have a negative effect on your score however, you may gain a few extra points with early payments.

Maintain Low Credit Card Balances

Following a bankruptcy, it is essential to open a new line of credit. This can be in the form of a credit card, gas card, retail store card, etc. If applying for a new credit card, avoid high balances. Ideally, consumers should keep credit cards at approximately 25% of the limit. Keeping a large balance will lower your credit score.

Stay Away from Credit Inquiries

Although credit inquiries are inevitable, especially when trying to re-establish credit, avoid applying for too many credit accounts. Many consumers are unaware of the damaging effects of inquiries. However, one inquiry can lower your credit score by 10 to 12 points. Because credit scores are already low following a bankruptcy, it is very important to keep inquiries to a minimum.

Carefully Monitor Credit Report

When attempting to boost your credit score, regular credit report monitoring is important. Homebuyers hoping to get approved for a prime rate mortgage will need a credit score of at least 680. After a bankruptcy, it will take time to achieve a high credit rating. However, if you take immediate steps to boost your score, it may be possible to get approved for a low rate mortgage within 24 months.

About The Auther

View our recommended online lenders to Buy a Home After Bankruptcy. Also, view our recommended sources for a Free Instant Credit Report.

Submitted By: Carrie Reeder

Buying a house after a bankruptcy takes a little research to find a bad credit mortgage with reasonable rates and terms. But it can be done with the help of online lenders. By comparing financing offers, you can quickly find a home loan with good terms.

Finding The Right Mortgage

With a credit score less than 650, you will need to apply for subprime financing with rates slightly higher than conventional home loans. Surprime financing is offered by traditional lenders, as well as specialized bad credit lenders. To get the most borrowing power, choose an adjustable rate or interest only mortgage. To further reduce your rates, plan on a down payment of 20% or more. Large cash reserves or a low debt ratio will also help you qualify for lower rates. But researching lenders is the surest way to find the lowest rates. Remember too that with subprime lending, you don’t pay for private mortgage insurance, even with less than 20% equity.

Before You Start Your Search

Before you start your subprime mortgage search, get a copy of your credit report. Check it for accuracy of your bankruptcy, and then use it to get loan quotes. That way lenders won’t have to access your report and further lower your credit score with unnecessary credit inquires.

Securing Mortgage Terms For The Future

When you start comparing mortgage offers, make sure the terms are favorable for your future financial goals. If you plan to refinance when your credit score improves, makes sure there aren’t any fees for early payment. This is also a benefit if you move before the loan is paid off. Another important factor to consider are closing costs, especially if you are planning a future refi. Paying extra thousands for a slightly lower rate doesn’t make sense if you don’t keep the loan for seven years or more. Even with the lower interest charges, you won’t see a savings. So take a look at the APR for a general idea of the total loan costs. But then look at the breakdown of the closing costs and interest rate to find the financing that works best for you and your financial situation.