If you have had a bankruptcy within the last 2 years you can pretty much forget qualifying for a conforming loan and possibly any loan at all except one that the rates and closings costs for are terrible. Once your bankruptcy hits that 2 year mark, you situation for a mortgage will gradually improve, and at the 4 year mark will become substantially better.


If you were foreclosed on because of a medical situation, it will be viewed in slightly better light.

Like a bankruptcy in your past, the longer it has been since the foreclosure, the better your chances of getting a mortgage will become.

Your Credit
Your credit report is one of the main factors for what type of loan you can obtain. If your scores are high enough, you can qualify for a conforming loan with the best rates.

However just because your scores might not be good enough to get a conforming loan with the best rates, doesn’t mean you can’t qualify for a conforming loan at a slightly higher rate, or for a non-conforming loan at a somewhat higher rate.

Longer trade histories help your credit score
Having too much debt may lower the amount of loan for which you qualify, but many people rush to pay off and then close all of their old accounts. While having too many accounts open doesn’t look good, your credit score is improved by having older accounts with a long credit history so closing an account in good standing that you have had for ten years might not benefit you. If you have many accounts open, you might want to close some, just make sure that you don’t close your oldest and keep only your newer credit cards. You also might consider closing, not just dormant accounts, but accounts with balances. You can close an account and continue paying on the balance and this may help raise your credit score.

How To Get Out Of A Bad Credit Situation?
Many mortgage lenders view credit counseling the same as a bankruptcy, except that credit counseling is an ongoing process. Once a bankruptcy is discharged, it drops off of your credit report after 10 years. Credit counseling stays open until the debt is paid off, and only after it is closed will it begin the process of aging off your credit history. Most mortgage lenders require borrowers to be out of either bankruptcy or credit counseling for the same period of time.

If you feel that your credit situation is getting out of control, call and try to work something out with your creditors yourself. They would always rather have some money than no money and are often willing to try to come up with a working arrangement.

Mortgage loans are the best kind of debt to have on your credit report, so if you are able to roll all of your credit card debt into your mortgage, your credit score should rise considerably within a few months. After building up equity in your home, you will be in a much better position to refinance into an even lower rate mortgage.


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