In the past, people who had filed for bankruptcy were automatically turned down by traditional mortgage lenders. Many people who wanted to buy a home thought they had to wait at least seven to ten years after a bankruptcy to be able to buy a home. This is a common mistake made by people who think they won't be able to buy a home for a long time.
Some people who file for bankruptcy have had trouble keeping track of their money, but a large number of those who file have just had bad luck. In the last five years, a record number of Australians have filed for bankruptcy. The recent rise in interest rates and the price of gas won't help either.
There are some signs that don't look good...
Even though a bankruptcy will hurt a borrower's credit score, it doesn't always mean they can't get a loan. Some loan officers are becoming more willing to take calculated risks because they know that sometimes bad things happen to good people.
Some lenders use a securing system to figure out if a buyer is worth taking a risk on. Bankruptcy is bad because it gives a low score. But some lenders are starting to look past the credit score and at the people who need the money.
Some mortgage professionals are willing to give a home loan much sooner than two or four years after a person has been let out of bankruptcy. People who have filed for liquidation bankruptcy may be able to get a loan a year after they are discharged. People who are in a Part IX debt agreement may also be able to get a mortgage.
Another common misconception is that if you've been bankrupt before, you'll need a big down payment and have to pay very high interest rates. There are programmes out there now that require as little as 5% down and have very attractive rates.
Some lenders even prequalify buyers for a loan, which saves time and makes it easier and faster to buy a home. When a buyer gets pre-approved, they will have more negotiating power.
Some mortgage professionals have a programme that will work for a buyer with a bankruptcy history no matter what the situation is. If a buyer can't get approved, there are custom plans that can help them rebuild their credit and get ready for a mortgage, making sure they can own a home in the future.
Now that there are more options, bankruptcy doesn't have to stop you from getting a home loan. People who have had trouble with money in the past will find it easier to get a mortgage if lenders are more creative.
To your continued success with money,
Joshua Thornton
