Scott Mathew operates several financial websites to help improve the knowledge and financial stability of the general public. Some of his work can be found at the following websites:
So without further ado:
Securing a second mortgage loan post bankruptcy – What are my prospects?
Are you a struggling homeowner who has gone through a messy bankruptcy and is also stuck in a cycle of rent and release? If answered yes, you must be dealing with the issues of financing your home and dealing with the band of creditors and lenders who are questioning about your bankruptcy status on your credit report. Well, getting a mortgage loan after bankruptcy is certainly a tough process as it tanks your credit score to a large extent, but it’s not impossible. A second mortgage loan is a home equity loan that is lent on the basis of the equity that you’ve tapped in your home. This is a secured loan and this means that the lender will foreclose your home if you’re unable to repay the loan on time. Have a look at the steps that you must take if you want to secure a second mortgage loan post-bankruptcy.
1. Pull out copies of your credit report: The first step that you must take before applying for a home equity loan is to pull out a free copy of your credit report so that you get to know what the credit bureaus have to say about you and what your credit score right now is. You need to make sure that all the debts that are included in bankruptcy are displayed in your report or else this will lower your DTI (debt-to-income) ratio. Take the needed steps to remove any erroneous information on your credit report so that you can boost the score to some extent.
2. Gather as much paperwork as you can: You must gather all kinds of paperwork that will prove that you’ve paid off all your bills on time since you’ve filed bankruptcy. This paperwork may include your recent credit card statements, utility bill payments, auto loan statements and other such papers. Make sure that no document shows late payment as this will lessen the chance of getting a home equity loan.
3. Shop around different mortgage lenders: You need to contact multiple mortgage lenders and tell them about your present financial situation. You have to tell them that you’ve recently filed bankruptcy and hearing this some mortgage lenders will agree to work with you and some may not. The longer you wait after bankruptcy, the longer it may take to find out a worthy mortgage lender. If you had filed Chapter 7 bankruptcy, it will stay on your credit report for 10 years and a Chapter 13 will disappear by 7 years.
4. Determine the equity in your home: Go for an appraisal and determine the equity that you have in your home so that you’re sure about the exact amount that you’re going to borrow from your lender. You must also factor closing costs as they often come in with a home equity loan.
5. Fill out the paperwork and send them to your lender: The next thing that you need to do is to fill out the paperwork and send the last 3 month’s copies of your paychecks, the recent federal income tax return and the checking account statements in order to analyze your gross monthly income.
After you’re done with all the above mentioned steps, you have to sign the closing documents so that officially your mortgage lender approves the application. Make sure you repay the second mortgage loan on time to avoid any kind of future financial discrepancies.
1. Pull out copies of your credit report: The first step that you must take before applying for a home equity loan is to pull out a free copy of your credit report so that you get to know what the credit bureaus have to say about you and what your credit score right now is. You need to make sure that all the debts that are included in bankruptcy are displayed in your report or else this will lower your DTI (debt-to-income) ratio. Take the needed steps to remove any erroneous information on your credit report so that you can boost the score to some extent.
2. Gather as much paperwork as you can: You must gather all kinds of paperwork that will prove that you’ve paid off all your bills on time since you’ve filed bankruptcy. This paperwork may include your recent credit card statements, utility bill payments, auto loan statements and other such papers. Make sure that no document shows late payment as this will lessen the chance of getting a home equity loan.
3. Shop around different mortgage lenders: You need to contact multiple mortgage lenders and tell them about your present financial situation. You have to tell them that you’ve recently filed bankruptcy and hearing this some mortgage lenders will agree to work with you and some may not. The longer you wait after bankruptcy, the longer it may take to find out a worthy mortgage lender. If you had filed Chapter 7 bankruptcy, it will stay on your credit report for 10 years and a Chapter 13 will disappear by 7 years.
4. Determine the equity in your home: Go for an appraisal and determine the equity that you have in your home so that you’re sure about the exact amount that you’re going to borrow from your lender. You must also factor closing costs as they often come in with a home equity loan.
5. Fill out the paperwork and send them to your lender: The next thing that you need to do is to fill out the paperwork and send the last 3 month’s copies of your paychecks, the recent federal income tax return and the checking account statements in order to analyze your gross monthly income.
After you’re done with all the above mentioned steps, you have to sign the closing documents so that officially your mortgage lender approves the application. Make sure you repay the second mortgage loan on time to avoid any kind of future financial discrepancies.
0 comments:
Post a Comment