Buying A House After Bankruptcy - Finding A Bad Credit Mortgage, 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.
With a credit score less than 650, you will need to apply for
subprime financing with rates slightly higher than conventional home loans.
Subprime financing is offered by traditional lenders, a... 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.
Subprime 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 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.
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.
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