If you have recently filed bankruptcy and you’re worried about getting a second mortgage loan, you need not fret. There are many who take out a home equity loan or a second mortgage even after filing bankruptcy. In case of a mortgage loan, you may have to wait for at least 2 years but you can get a home equity loan within much less time than that of a traditional mortgage loan. When you take out a home mortgage loan, you must be extra watchful because it involves a large sum of money. Have a look at the tips to smartly obtain a second mortgage after filing bankruptcy.
1. Repair your credit rating: As you know that your credit rating is the most important thing that is taken into consideration by the lenders before approving a loan, you need to first go through effective credit repair. Order a free copy of your credit report and dispute the errors and the negative listings so that your score is increased, making you creditworthy to the lenders. Carry on making timely and regular payments on your financial obligations so that you can easily put yourself in a better position to get a new second mortgage loan.
2. Verify the lending conditions of the sub prime lenders: Usually, you will find the sub prime lenders lending you loans at higher rates in order to lend credit to borrowers with high risk. Stay updated on the current home equity loan rates so that you’re not duped into receiving outrageously high interest rates while refinancing. If you have adverse credit rating, it is most likely that you may have to pay some points more than that of a traditional loan.
3. Shop around for a good rate: In order to get a second mortgage after filing bankruptcy, you need to make a comprehensive market research so that you get the most competitive rate and in accordance with your finances. Gather various quotes on your home mortgage loan and also compare the rates and service charges associated with a mortgage loan. Select the loan that suits your financial needs in the best way.
4. Check the other factors: A mortgage loan does not only depend on the interest rate of the home loan. There are some other factors too that are taken into consideration. The location of the property and your employment history is very important when it comes to seeking a refinance quote. The lenders will look into all these factors so that they do not have to face the risk of the borrower defaulting on the mortgage loans. Get the detailed information on all this online so that you can take a good decision while refinancing your mortgage.
Therefore, if you have filed bankruptcy and are spending sleepless nights about the possibility of getting a second mortgage, you must have educated yourself from the concerns of this article. Consider the points mentioned above so that you can obtain the best home mortgage loan in the market.
POSTED BY Admin ON February 9th, 2011.
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It is not an easy task recovering from bankruptcy, but it is possible to get a mortgage after being discharged. The best way to see if you can get a mortgage after bankruptcy is to go through the pre-approval process. No risk involved and it is fast and easy. Upon completion you will have exact terms and payment of the loan. It is possible to get up to 28 percent of your pre-tax income, but it is up to you to decide if you can comfortably and consistently afford to pay that amount. One of the first things that needs to be done is begin building up your credit, by paying on time anything that wasn’t discharged promptly and also limiting any other debt. Your lender will look at your debt to income ratio in determining if you are able to pay back the loan. It is very important that you show your lender all existing income in paper form (pay stubs and tax returns for example) as proof that you are able to repay any type of new loan. These documents that verify your income are important to prove that you make income on a consistent basis. When you pay your rent on time that is the beginning of establishing a great financial track record. Checks are stamped with date and time, which is a perfect document to present your lender. Money orders or cash are not good choices because they are difficult to validate.
If you don’t have a checking account, a tenant will have to get a receipt from the landlord to prove their payment history. Have you checked your credit score report lately? This would be smart idea because more often than not there are inaccuracies and these need to be dealt with and may take time to be resolved properly. Be patient and persistent with this process, it will not happen overnight. Equifax, Trans Union and Experian are the major credit report agencies.
In reality, you probably will have to pay an interest rate higher than someone with perfect credit, but you can always refinance at a later time for a better rate. Waiting a couple of years after bankruptcy can provide enough time to get your credit report to a place where it might be possible to qualify for average rates. Do some preliminary shopping online for lenders; you can easily see comparative rates at a glance and save time.
POSTED BY Admin ON February 1st, 2011.
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Taking on a mortgage is probably the biggest financial commitment you are going to make, so getting it right first time is incredibly important, especially if you are looking for a mortgage after bankruptcy. It is not only a case of choosing the right mortgage product to suit your personal circumstances, it is also imperative you make sure that you choose the right repayment option too. There are two main options offered to borrowers, both of which have their own merits and downfalls.
The traditional type of mortgage is known as a repayment mortgage, and your monthly payment goes towards not only the interest on your mortgage, but also towards repaying the capital sum borrowed. This type of mortgage is preferable to most people as it means that at the end of the mortgage term the entire amount borrowed will be paid off, and there will be no lump sum to clear or re-borrow. While you will always be paying a small amount towards the capital borrowed, for the first few years of a repayment mortgage, the majority of your monthly payment will be going towards paying the interest that is charged to your account. Typically the first ten to twelve years of a repayment mortgage are more interest than capital, in fact it is only around year twelve that more than 50% of your monthly payment amount will be going towards repaying the capital.
The second type of mortgage is an interest only mortgage, and the monthly payments on this will be going purely towards the interest, with no amount being paid off the capital sum borrowed. This method does dramatically reduce the monthly payments that need to be made, however the downside to this is that the capital sum borrowed is staying the same month in month out. This means that at the end of the mortgage term, the amount your initially borrowed is still owing, and unless you know you are going to come into a lump sum of money that will allow you to repay this amount in full, then taking an interest only mortgage can be a risky option. However, many lenders realise that the first few months of home ownership can be an expensive time, and for this reason it is not uncommon to find that they offer interest only payments for a limited amount of time, for example three or six months, meaning you have a little extra free cash to help with things such as furnishing or re-decorating your new home.
There is no right or wrong type of mortgage, and the way you choose to handle your mortgage repayments is purely your choice and should be suited to your current circumstances. The most important factor when choosing your repayment type, particularly when taking out a mortgage after bankruptcy is to be sure you can afford to make them every month.
