Bankruptcy and mortgage

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Updated: 3/24/2003 1:46 pm
If you've declared bankruptcy, it's still possible for you to obtain a mortgage to purchase a home. However, understand that with a bankruptcy on your credit report, you'll most likely need to obtain what's called a sub-prime loan in order to obtain a mortgage. A sub-prime loan is any mortgage that requires that you pay a higher interest rate because you're considered a higher risk by the investor because of your negative credit history. You'll still be required to show proof of income and job stability and come up with a down payment in order for a lender to be willing to loan you the money for your mortgage. Keep in mind that owning a home can actually benefit you financially and help you to restore your credit after bankruptcy. Not only do you receive a significant tax deduction, but if you pay your mortgage payment on time, you'll be able to establish a positive history on your credit record. For those who already have a mortgage and have filed bankruptcy, you may be able to delay foreclosure on your home by negotiating a payment deal with your lender.

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