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If you have filed bankruptcy in the past, you might think that getting a mortgage is impossible. Fortunately, there are a couple of different routes you can take, including finding a private home loan in Cambridge to buy the home of your dreams.
Bankruptcy and consumer proposal essentially help you wipe your slate clean of debt. In the process, they negatively impact your credit. When you apply for a mortgage, you provide information to the lender, which then allows that lender to assess its risk in providing you with a mortgage or even a second mortgage in Cambridge. Bankruptcy makes you appear as very high risk, and this often means that your applications for mortgage go unanswered or denied. What can you do if this is the case?
If you want to go through a mainstream, “prime” lender, then you need to wait at least two years after your bankruptcy has been discharged. What’s more, within that two years, you must actively work toward rebuilding a solid credit history. Even then, many lenders will still turn you down, particularly in today’s economy when even people with relatively good credit have trouble securing home loans. Fortunately, there are still other options. You will likely need to go through a private lender to get a private home loan in Cambridge.
Private lenders take the time to look at more than just your credit history. In fact, they look at your employment and income – and you can start the day your bankruptcy is discharged. However, because lending to you so soon after a bankruptcy and with less-than-ideal credit is still considered a risk, there are a few differences. Whether you want first or second mortgages in Cambridge, your interest rates and fees will be higher. What’s more, you will need to come up with a down payment of at least 15% of the purchase price of the home, with up to 25% giving you the best possible options.
Although the interest rates associated with a private home loan in Cambridge are higher than those associated with mainstream lenders, remember that you do not necessarily have to continue to pay that rate for the life of the mortgage. In fact, if you get your credit back on track after your bankruptcy, you can refinance your mortgage with a prime lender down the line and enjoy a better interest rate along with lower monthly payments. In this manner, the alternative lenders in the area act as a stepping stone to help you get your credit back to where it should be following a bankruptcy or consumer proposal.
Although bankruptcy certainly limits your options when it comes to getting a first or second mortgage in Cambridge, it does not mean that all hope is lost. Plenty of alternative lenders exist to help you navigate your financial hurdles and get the mortgage you need for the house you love.