Getting Mortgage Loans After Bankruptcy: Looking For The right Deal

It can seem that, at the time of extreme debt, opting to file for bankruptcy is the right decision. But there are consequences to that decision, and when the bankruptcy term is completed, the opportunities to secure funding can be extremely limited. For example, getting a mortgage loan after bankruptcy is a big ask.But in actual fact, while it is far from easy to secure mortgage approval despite bankruptcy, there are ways to overcome the problem. A variety of special mortgage packages are available to those borrowers seeking to recover their credit status, and while the terms are far from ideal, they do at least offer a chance to get back on the horse, so to speak.The bottom line is that bankruptcy does not end financial opportunities, but only temporarily removes the chance of securing good terms. Getting a mortgage loan is possible, and there are 3 likely options to consider.1. A Bankruptcy MortgagesAs a bankruptee, it stands to reason that a specially-designed mortgage package be considered. With this option, the lender actually restructures all of the existing debts to ensure there is sufficient excess income to meet the repayments on the mortgage loan after bankruptcy.This option is available to anyone who has bankruptcy in their recent credit history, but the availability limit is different according to the chapter under which bankruptcy was granted. For example, with Chapter 13 cases, mortgage approval despite bankruptcy is only available after 4 years.Straightforward bankruptcy cases, under chapter 7 for example, can see mortgage loan approval granted after just 12 months.2.  Mortgages for Bad Credit ApplicantsSince bankruptcy prompts such a huge hit on a credit score, another logical mortgage option is one that is designed for bad credit borrowers. These are not exclusive to those with bankruptcy in their histories, so the terms will not be ideally suited to those seeking a mortgage loan after bankruptcy. However, they are still affordable.For example, the mortgage term is typically longer than usual to ensure the size of the monthly repayments is kept to a minimum. This means that meeting the repayments is made easier, which in turn means getting mortgage approval despite bankruptcy is more likely.Bear in mind, however, that the longer repayment period also means that the amount of interest paid over the lifetime of the mortgage loan is much more than normal. With an APR of 4%, the interest on a $150,000 mortgage over 40 years can be $155,000; over 30 years it is $142,000.3. Federal Housing Administration (FHA)A third viable option when seeking a mortgage loan after bankruptcy is an FHA-supported loan. But there are some conditions that need to be satisfied before approval can be hoped for.  For a start, the range of properties available is usually limited to those offered through an FHA housing scheme. This usually means your preferred home is probably not within reach.What must be kept in mind is that the FHA is interested in helping those in need of assistance in securing mortgage approval despite bankruptcy. So, those with means are not generally encouraged to apply. It is also worth considering that the FHA does not issue mortgage loans, but guarantees 25% of the loan.This means a down payment is not usually needed, and lowers the interest rate considerably. But it also means that conditions set by the lender need to be satisfied. Bankruptcy granted under chapter 7 of the bankruptcy code entitles the applicant to apply for an FHA mortgage after just 12 months.