How You Can Be Approved for Home Mortgage Loan after Bankruptcy

by Simon Volkov on December 21, 2011

Obtaining approval for mortgage note after bankruptcy requires borrowers to engage in credit repair methods to improve credit ratings. People who fix credit problems can occasionally qualify for a mortgage loan within a few years as long as they stayed in compliance with bankruptcy payments.

Being able to qualify for mortgage after bankruptcy requires dedication to taking care of financial obligations. Regardless the circumstances that caused personal bankruptcy, banks perceive this as evidence that borrowers cannot be counted on to pay back their debt.

Debtors that enter into Chapter 13 bankruptcy are required to establish payment plans which can extend up to five years. Payments are in accordance with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) that became effective in 2005.

Consumers can enhance credit scores by submitting Chapter 13 payments on time and in full. If they do not stick with payment requirements the bankruptcy Trustee can dismiss the petition and cause debtors to fail out of bankruptcy. When this takes place, individuals significantly lessen their chance of receiving approval for home loans.

Those who are not eligible for home loans caused by chapter 13 bankruptcy or foreclosure may find it beneficial to research creative finance methods. This includes practices such as owner will carry, seller carry back loans, Subject 2, take over payments, lease-to-purchase, and lease-to-own.

Owner will carry notes and seller carry back trust deeds are a good method for restoring credit after bankruptcy. Essentially, property owners carry back all or part of financing of the purchase price for a few years.

Sellers that offer to provide owner financing normally require buyers to supply a down payment and only offer partial financing.

Lease to purchase contracts allow buyers live in the home as a tenant. A portion of monthly rent payments are allotted toward purchasing the home. Lease-to-by contracts are typically in effect for two to three years. On average, sellers contribute 30 percent of monthly rent payments toward the sale price.

Having the ability to be eligible for financing after personal bankruptcy is not an easy feat. However, with endurance and determination people can enhance credit scores and negative credit will ultimately go away.

Discover additional methods to obtain mortgage after bankruptcy from California real estate investor and author, Simon Volkov. He provides extensive information about ways to avoid personal bankruptcy, buying houses with poor credit, and creative financing methods at his website Simon Volkov.com.

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