Mortgage After Bankruptcy

If you or your spouse have filed for bankruptcy recently, it doesn't mean you cannot qualify for a mortgage loan. Although lenders will typically charge a higher interest rate to compensate for the higher risk associated with issuing a loan to someone with a black mark on their record, there are steps you can take to ensure you get the best possible rate.

Take a hypothetical situation where your spouse filed for bankruptcy three years ago, and you wish to purchase a home together.

The first issue you should look at is when the bankruptcy filing occurred. If it happened over a year or two ago, it greatly improves your chances of getting a loan. You should contact multiple lenders and ask how a recorded bankruptcy would affect the rates you receive.

You should also be sure to request two quotes: one if you were to take out the loan solely in your name, and one with both of you on the title. If the terms are the same for both cases, then you can proceed with the loan, long as no liens can be placed on your spouse's property to pay off unpaid debts. If you can get a better rate yourself, then do so and add your spouse to title after the bankruptcy has been completely settled.

No matter which path of action you decide to take, it's imperative to discuss everything with a lawyer prior to signing any documents. This is an extremely important and complicated decision, and proper legal consultation is considered a must.

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