Have you always dreamt of owning your own house? Do you think bankruptcy will not let that dream to come true? Well, you’re wrong! Agreed that bankruptcy can have a serious effect on one’s credit rating, but that does not end your life. It is rather a second chance. Bankruptcy allows you to rebuild your credit and enjoy your life without financial strain. Once your debts are discharged, within a few months you will be given a number of credit offers including credit cards.

Buying a mortgage after bankruptcy is not impossible either. Not only can you get a mortgage after declaring bankruptcy but you can get it sooner than you have thought possible. However, don’t expect to buy your dream house right after bankruptcy. You’ll have to wait for some time. Generally people can get mortgages with a good interest rate within one year from bankruptcy. However, a two-year waiting period is suggested by experts. Thus, in the first few years, you can work on building a good credit score for yourself, so that when you apply for a mortgage, you can get better rates.

If you desperately need a house, then you can get a mortgage loan right after your debts are recharged. However, because you haven’t had a chance to rebuild your credit, the mortgage companies are likely to ask for a very high interest rate, high lending fees (almost three times the normal), and large prepayment penalties. If you really have to go for this option, be careful. Read all the terms and conditions before you sign any document. Also, try to put in about 20% down-payment.

However, if you can wait, allow a year or two before you apply for a mortgage. Meanwhile, try to rebuild your credit. It’s not a difficult task. Get your credit report. Ensure all the information on it is correct. Report any mistakes to the credit agencies. Increase your credibility by paying all the bills on time, use less credit than available and don’t take too much credit too soon. However, take some credit and pay it off on time. Also, you can get a credit card. Make small purchases and pay the dues every month. All this will reflect positively on your credit score.

After about a year or two, you will be ready to take a mortgage. Don’t just apply to one mortgage company. Shop around for best rates. Work with a qualified realtor. If you still don’t get good rates, and if your credit score is still less, spend another 9–12 months building your credit. Don’t fall for subprime lending. Subprime lenders will charge you high processing fees and prepayment penalties. The only fee you actually are required to pay is the application fee to cover the cost of pulling your credit application.

The lender does not only look at your credit history, but your reason for bankruptcy too may influence the lender. Also, having a job is essential for you to apply for a mortgage after bankruptcy. You should have been in that job since bankruptcy. This will ensure the lender that you have sufficient income to repay your loans.

Ryan Paul is an expert professional in providing information related to mortgage companies.