Refinancing Your Home Mortgage Following Bankruptcy

Refinancing Your Home Mortgage Following Bankruptcy 1

Refinancing Your Home Mortgage Following Bankruptcy
Bankruptcy is​ the​ last step for most people who are undergoing tough financial times .​
Many people fear that by declaring bankruptcy they will ruin their credit for the​ rest of​ their lives,​ but they find that they are able to​ begin rebuilding credit immediately after the​ bankruptcy becomes final .​
Get Your Debt under Control
Bankruptcy offers you​ the​ opportunity for a​ fresh slate with your finances .​
Your old debt will be wiped clean; however,​ any years of​ established credit are gone as​ well .​
Bankruptcy can be a​ real stress relief if​ you​ are in​ a​ desperate situation,​ but it​ is​ important to​ realize what has brought you​ to​ that point .​
If you​ declare bankruptcy and then continue without changing your spending habits,​ you​ are destined to​ end up in​ a​ similar situation again .​
The best way to​ use bankruptcy is​ as​ a​ learning tool .​
Know where you​ lost control of​ your spending,​ and be ready to​ move on​ from there .​
Lower Your Expenses
One of​ the​ best ways to​ lower your expenses is​ to​ refinance your home mortgage .​
You may think that finding a​ lender to​ refinance your home mortgage following bankruptcy will be nearly impossible,​ but that is​ not so .​
Depending on​ your situation you​ may be able to​ walk into a​ bank the​ day after your debts are discharged by the​ bankruptcy court and refinance your home mortgage .​
If you​ have a​ good deal of​ equity in​ your home,​ you​ will find it​ much easier to​ refinance following a​ bankruptcy.
Even if​ you​ do not have a​ good deal of​ equity,​ you​ should be able to​ refinance your home mortgage within six months to​ one year from the​ final date of​ your bankruptcy .​
While you​ are waiting to​ refinance your home there are several steps that you​ can take to​ make yourself more attractive to​ lenders .​
Pay all of​ your bills on​ time .​
This includes your current mortgage as​ well as​ any utility,​ student loan,​ or​ other bills that you​ have following the​ bankruptcy.
Do not attempt to​ open other lines of​ credit,​ such as​ new credit cards or​ lines of​ credit at​ stores .​
While credit is​ important,​ if​ your number one goal is​ to​ refinance your mortgage after a​ bankruptcy,​ you​ do not want to​ appear to​ the​ bank that you​ are in​ danger of​ falling into the​ same credit trap that you​ found yourself in​ prior to​ your initial bankruptcy.
Why Refinance Your Home Mortgage After a​ Bankruptcy?
What are the​ benefits of​ refinancing your home mortgage after a​ bankruptcy? There are many benefits to​ this actually .​
By refinancing your mortgage you​ can lower your monthly payments in​ a​ variety of​ ways .​
You can extend the​ length of​ the​ loan or​ refinance at​ a​ lower interest rate,​ both of​ which will lower your monthly payment .​
While you​ will be considered a​ higher risk loan,​ and will not receive the​ lowest interest rate available,​ it​ is​ still possible that your interest rate may be lower than when you​ initially closed on​ your mortgage .​
Another reason to​ consider refinancing your home mortgage after a​ bankruptcy is​ that this will automatically start you​ on​ the​ path to​ repairing your credit .​
The refinance will show up as​ a​ new loan .​
The older loan,​ which due to​ the​ financial problems that brought about your bankruptcy may have had late payments or​ missed payments,​ is​ closed .​
The new loan will show no late payments or​ penalties.
Where to​ Refinance
Too often,​ people feel that the​ black mark left by bankruptcy is​ an​ obstacle that they cannot overcome .​
Rather than shopping for a​ mortgage,​ they go directly to​ a​ sub prime lender,​ or​ worse,​ a​ lender who involves themselves in​ predatory loan practices .​
While sub prime lenders do have their place,​ they should not be your first choice .​
Lenders who involve themselves in​ predatory practices,​ such as​ excessively high interest rates,​ or​ interest compounded on​ an​ irregular schedule should be avoided at​ all costs .​
They will not help you​ .​
Sub prime lenders are not likely to​ provide you​ with as​ low of​ an​ interest rate as​ you​ can receive from a​ traditional lending institution .​
Following a​ bankruptcy,​ your first stop in​ refinancing your home should be the​ lender that holds your mortgage currently .​
Not only do they know your payment history,​ and the​ home,​ they may also save you​ some money in​ closing costs by keeping the​ loan in​ house .​
If they are not willing to​ refinance your mortgage,​ ask them what you​ should do to​ make yourself more attractive .​
If they recommend that you​ come back after three to​ six months,​ which is​ probably the​ best advice .​
If they are not interested in​ refinancing your mortgage,​ don't let it​ discourage you,​ shop mortgages at​ other traditional lenders.

Refinancing Your Home Mortgage Following Bankruptcy

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