Today I want to share some great advice from my favorite mortgage lender, Dale Lawrence, about getting a mortgage post-bankruptcy. As you’ll see below, it’s definitely doable if you follow the right steps! If you’re in this situation, or just need some mortgage advice, don’t hesitate to reach out to Dale. Contact me and I’ll be happy to put you in touch!
Tips on Finding a Mortgage After Bankruptcy
Get the timing right. Don’t rush into a mortgage. Now, to be clear: A bankruptcy will stay on your record for a decade or more, but I don’t think you need to wait anywhere near that long before pursuing a mortgage. Do let the dust settle on your bankruptcy papers before you move forward with another major financial decision, though.
Take stock. As the bankruptcy discharge papers are filed and you allow yourself this brief waiting period, take stock of where you are financially. What have you lost in the bankruptcy, and what does your credit score look like right now? It helps to get an accurate financial snapshot before you move ahead.
Pay your bills. Even after a bankruptcy, you may have some unresolved and non-dischargeable debts. Car loan payments often remain, for instance, to say nothing of your regular living expenses—insurance, rent, and so on. Make sure you are able to pay those bills on your current income before you take on something as major as a mortgage payment.
Save some money. Take some time to rebuild a nest egg for yourself—enough to have an emergency fund and also to make a small down payment on a new home. How big of a down payment will you need to make? That’s a question to discuss with me one-on-one.
Consider the expenses of homeownership. As you start thinking about buying, remember that owning a home is not cheap, and it’s not just about the mortgage payment, either. Repairs, insurance, utilities, lawn care—you’ll have to pay for all of this, in some form or fashion, and that’s something you’ll want to plan and budget for.
Get your paperwork ready. You’ll need to present some financial paperwork before we can get the ball rolling on a mortgage. Pay stubs, going back a few months, will be vital. Having bank account records and tax returns handy can also be helpful.
Shop around for the right house. Don’t bite off more than you can chew, and don’t risk becoming house-poor. Speak with me about what you can realistically afford, and get a mortgage that’s actually pragmatic and achievable moving forward.
Bankruptcy can feel disheartening, but it doesn’t have to lead you to despair. You can still find a great home and get a superb mortgage rate. The only way to begin the process is to give me a call and ask about your options.