Being bankrupt does not mean the end of life. The financial decisions you make afterward will help you get back on your feet. The good news is that you can be able to buy a house even after bankruptcy. This is because there are no rules that eliminate you from getting the loan. Regardless of the type of bankruptcy, you can get a mortgage after the judge discharges you. So, understand the mortgage loans in Dubai and go for one that suits your situation. However, this will depend on the type of loan you need. Here is what you need to do to get a loan after bankruptcy.
Work on Your Credit Score
If you are bankrupt, it means your credit score is damaged. The good thing is that you can still get a loan even with this record. However, you will have to meet your lender’s minimum requirements. So, take time to re-establish your credit score. The first thing is securing a credit card. Make a deposit and make sure you pay off the debts every month. Make sure you pay the debts and bills on time. The most important thing is to show you are cooperating and changing your behavior.
Write an Explanation Letter
After bankruptcy, the moneylenders will be very keen on your finances. Remember, giving a loan means taking a risk on you. So, you need to let the lenders know that you will make the monthly payments on time. Being bankrupt raises a red flag to the lenders. Therefore, the best way to remove this doubt and improve the chances of getting a mortgage is by writing an explanation letter. The letter should explain to the lender why you went and declared bankrupt and what you are doing to move forward. This is not mandatory but it helps lenders to see something more than the money you are borrowing.
Apply for a Mortgage Preapproval
Once you set your finances in order, the next important thing you ought to do is apply for a pre-approval. A pre-approval letter comes from the lender. It tells you the loan limit eligible for you. The letter is crucial since it helps you know the budget you should set for a home purchase. It also lets the sellers and agents know that you can get funding to purchase the home.
Answer to Lenders Questions
Once you have done all the above, the ball now lies on the lender’s side. So, the lender will assess your income, DTI, and assets to determine your qualification. If your details are satisfactory, the lender will send the preapproval letter. The letter will help you to shop for the home you can afford. If they have questions, make sure you answer them with utmost honesty. Being honest and responding quickly will improve the chances of getting approved.
From the details above, you can see that it is possible to get a mortgage loan after bankruptcy. However, the period you have to wait will depend on the type of bankruptcy and the type of loan you want. So, make sure you do everything mentioned in the article to help you buy your home.