Mortgage With a Bankruptcy

With credit card debt at an all time high in America many homeowners are turning to bankruptcy to eliminate their debt. One worry many home owners have about filing bankruptcy is the ability to get a mortgage after bankruptcy. They often wonder, can i get a mortgage with a bankruptcy? The answer to that question is yes you can, however bankruptcy mortgages do have slightly different rules and guidelines then normal conforming mortgages.

Bankruptcy mortgages are sold by sub prime lenders through mortgage brokers, very rarely will a local bank or credit union offer bankruptcy mortgage programs. These sub prime lenders will lend money for bankruptcy mortgages to consumers who are just 1 day from a chapter 7 bankruptcy discharge. With these sub prime programs you can also refinance your chapter 13 bankruptcy. Even though getting a mortgage with a bankruptcy is possible in most cases 100%25 loan amounts are not. Bankruptcy lenders will cap bankruptcy mortgage borrowers at 80-90%25 of the current appraised value of the home so a down payment is required for a purchase. Due to the high risk involved in a bankruptcy mortgage you can expect an interest rate around 9-12%25. The mortgage broker will be able to price the loan with all their lenders to ensure that you get the lowest rate and terms possible for your situation.

With the obvious negatives like high interest rate, high fees and limited loan to values bankruptcy mortgages do offer positive benefits as well. For instance nothing will increases your credit score faster than a mortgage paid in a timely manner. In most cases 12-18 months after you close your bankruptcy mortgage you can refinance it and lower interest rate and continue on the path to credit restoration.

Darin Sewell is a seasoned expert in all areas of home finance. Learn more about Darin at http://www.milwaukeehomeloans.net