Mortgage Financing after Bankruptcy

Mortgage can be defined as transfer of interest of a property or any kind of real estate to the lender of a loan. Technically speaking, mortgage is a term, that is given to any property or real estate, that is pledged as a collateral with the lender. The term mortgage however, has become a concept with a very wide scope due to the origin of mortgage loans. Before that, let us take a look at the concept of mortgage loans.

Mortgage Loans

The mortgage loans, which are also termed as mortgage financing, are principally based on the concept of mortgage. In the transaction of a mortgage loan, the bank or the lending organization provides the borrower with finances that are equivalent to the market value of the real estate that the purchaser wishes to purchase. The real estate that is purchased, is pledged as a collateral or 'mortgage', against the loan. The pledging of the real estate as a mortgage is usually done with the help of legally enforceable documents and instruments. At times, the deeds of the house or the real estate are surrendered to the lender. It must also be noted that many mortgage loans are not subject to debt settlement and the lender can legally take over and auction off the real estate to recover losses, if the loan is defaulted by the borrower. One must also note that home loans which are not secured loans are usually not categorized as mortgage loans.

Types of Mortgage Loans

The following are some common types of mortgage loans.

• Standard Mortgage Loans: The standard mortgage loans are the loans that are used to purchase real estate, which is eventually pledged as a collateral against the loan.
• Bad Credit Mortgages: The bad credit mortgages are the ones which are given to people who have a bad credit history. This loan usually has a high down payment and also an expensive rate of interest.
• Bankruptcy Mortgage: Bankruptcy mortgage, as the name suggests is the type of mortgage that is given after bankruptcy or foreclosure.
• Corporate or Industrial Mortgage: The corporate or industrial mortgage is a type of mortgage loan, that is given to a corporation, to set up an office or a manufacturing plant. Sometimes, this type of mortgage is also known as a business mortgage. This type of loan, is also known as commercial mortgage.
• Home Mortgage: A home mortgage is a type of mortgage loan, that is meant for buying a home. Usually this type of mortgage has a low rate of interest that is regulated by the regional government.

Though the mortgage loans have been classified on the basis of their purposes, their primary working and nature of transaction remains the same.

Mortgage Financing after Bankruptcy

As mentioned above, mortgage financing is a type of mortgage loan that is given to people after bankruptcy. After bankruptcy a person's credit rating and credit score plunge down to the minimum possible level (that is, 300 if the credit score is numerically expressed). Some mortgage lenders or mortgage companies would straight forward refuse to sanction mortgage finance after bankruptcy, if your credit score is down to the minimum . However, if you have a good job and a good income projection, then there are good chances that the mortgage would get approved. Another similar type of loan that you can look up is the mortgage financing after foreclosure.

If the application for the mortgage financing is rejected, then you need to find a really good job and at the same time, also improve your credit scores and credit ratings. An improvement in the credit score would also improve your chances of getting mortgage finance approved. The interest and installments are mostly calculated on the basis of the borrower's current income. If the mortgage loan is being borrowed by a corporation or a business, then the probability of the mortgage being approved is also very low.

As a conclusion, my advice to you would be, after bankruptcy, improve your credit rating and then apply for a mortgage financing loan which is spanned over a longer period of time. It is also advisable to look for a property that are of medium market value. In this manner, you would have to pay the lender a small amount of installment for a long period of time. The long time period sounds a bit burdensome, but it proves to be convenient, as you would not end up on losing a large amount of money by paying a high rate of interest.