Many American consumers fear that they won't be able to get
a good mortgage if they claim bankruptcy. In fact, more
lenders than ever will work with homeowners who have fallen
on hard times and want to rebuild their credit. Before you
start looking for a new home, cover these bases:

Give yourself time to rebound. Whether you had to turn to
bankruptcy because of a divorce, a medical emergency, a job
loss, or a problem spending habit, give yourself a little
time for the air to clear before house hunting. Mortgage
lenders will want to see that you have put some space
between you and your money troubles. You can use the time to
start saving for your down payment.

Fix the root problem first. Figure out where your money
troubles started and patch up the leaks. If you wound up in
court because you couldn't control your credit card
spending, resist the urge to rack up new debt after your
bankruptcy discharge. Mortgage lenders won't help you if you
appear to be repeating the same bad cycle.

Pay your rent on time for two years. Do whatever it takes to
get your rent to the landlord on time for twenty-four
consecutive months. If you miss a month, the clock starts
again from zero. Therefore, chop out anything in the budget
that could set you back from your dream of a fresh mortgage.
If your landlord doesn't report to any of the major credit
bureaus, that's okay. Just get a dated receipt for every
rent payment, which you can use to prove your case to a
mortgage underwriter.

Save up a twenty percent down payment. With all the
no-money-down mortgage offers you see on television, it
sounds almost antiquated to stash a huge chunk of money into
savings. In reality, a solid down payment proves to a
mortgage lender that you're serious about overcoming your
past problems with money. A large down payment will also
reduce your monthly mortgage payment and save you from
paying high priced default insurance on your loan.

Work with a live human being. Don't let a computerized
scoring system stand between you and your mortgage. Because
mortgages are secure debts, many lenders stand ready to
compete for your business, despite your past credit history.
Mortgage lenders, especially those with branch offices in
your neighborhood, can perform a "manual underwriting"
process where they examine documentation like your rent
receipts and your bank statements to show that you have
truly overcome your past problems. 

Kevin Adelsberg is a writer for FasteMortgage.com.
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