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Mortgage after Bankruptcy Is Possible  

The American Dream of owning your own home is a desire most people in the Unites States share.  Sometimes circumstances or a series of bad luck can make that dream seem impossible.  Bankruptcy that destroys your credit rating and gives you bad credit is one such circumstance.  Many people wonder if there is any way to still purchase a home or even participate in mortgage refinancing after you have gone through bankruptcy.  By understanding what it takes to do a mortgage refinance or a qualify for a new loan on a home after bankruptcy, you can take some steps to speed up the process while waiting the period of time usually required for your credit scores to go back up.   

This waiting period can be anywhere from 1 to 5 years from the date your bankruptcy is discharged, depending on your circumstances.  If you have improved your credit scores over this period of time, you may not have to look for a bad credit mortgage, which doesn’t offer as good of interest rates, but may be able to look for a conventional loan.  It is important to work on raising your credit score and having all your records in order during this period of time, so that you are ready when that waiting period is over.  Usually, to qualify for an FHA loan, your waiting period from the bankruptcy discharge date is 2 years, unless there are extenuating circumstances that may allow you to begin the home loan process after one year.  If you want a conventional loan, the waiting period is typically 5 years. 

One of the most important parts when working toward getting a mortgage after bankruptcy will be the documentation needed to process the loan.  You should file and keep handy your discharge papers so that you can show the lender the discharge date when asked.  You should keep all your financial paperwork in order so that anything that is required can be found quickly and easily.  It is helpful to get a copy of your credit report within a few months of the discharge to see if the bankruptcy discharge is reported there.  If it is not being reported, you will want to make calls and find out where to send copies of the discharge papers so that it can be properly reported on your credit report. 

Improving your credit score takes time.  You can work on this during your waiting period after bankruptcy.  You will want to be sure to pay off your debts and make all payments on time.  This will help raise your credit score again so you can more easily qualify for a mortgage loan.  If you can avoid it, don't open any new accounts and work hard to live below your income.  You will also want to save up the money you will need for a down payment and closing costs so that when your wait is over, you are ready to go.  It is nice to know that you can still get a mortgage after bankruptcy.