Refinancing Your Mortgage After Bankruptcy

Refinancing Your Mortgage After Bankruptcy

Refinancing Your Mortgage After Bankruptcy
It is​ a​ general conception that getting a​ refinance loan after filing a​ bankruptcy is​ quite difficult .​
But you​ can avail a​ home loan provided you​ pay the​ interest at​ a​ slightly higher rate .​
Generally,​ lenders do not prefer taking the​ risk of​ offering mortgages to​ someone who has filed bankruptcy .​
But there are the​ subprime lenders who can offer you​ loans at​ higher interest rates,​ sometimes even after six months of​ finalizing your bankruptcy.
Filing a​ bankruptcy case affects your credit status as​ it​ reflects your inability to​ pay down your debts .​
a​ Chapter 7 Bankruptcy stays in​ your credit report for at​ least 7 years whereas Chapter 13 Bankruptcy is​ featured in​ the​ report for 10 years .​
But this does not mean that you​ won’t be getting credit – the​ only thing is​ that you​ won’t qualify for a​ reasonable rate .​
Generally,​ most lenders in​ the​ primary mortgage market will consider offering you​ the​ loan only after 2 years of​ filing for bankruptcy .​
But you​ need to​ be current on​ your bills during this period .​
You will be able to​ re-establish a​ better credit profile with a​ Chapter 13 bankruptcy,​ as​ it​ requires you​ to​ follow a​ repayment plan to​ become debt-free within 3 to​ 5 years .​
This isn’t easier with a​ Chapter 7 bankruptcy because it​ allows for the​ discharge of​ all your debts,​ and you​ don’t have to​ repay any part of​ your unpaid credit .​
But Chapter 13 bankruptcy helps you​ to​ prove your creditworthiness while you​ continue to​ pay for a​ certain percentage of​ your debts including the​ mortgage .​

One way to​ establish good credit within 2 years of​ declaring bankruptcy is​ to​ open a​ credit card account and make payments regularly .​
This will enable you​ to​ improve your credit score .​
You should also try to​ build up a​ savings account,​ since the​ more cash you​ have at​ hand,​ the​ better .​
You may also look for a​ secondary source of​ income so that you​ can pay down the​ debts,​ which are not discharged by bankruptcy .​
Maintaining a​ good credit profile thus becomes a​ necessity if​ you​ wish to​ refinance after bankruptcy .​
When you​ have build up a​ fair credit history,​ try to​ look for mortgage quotes that are affordable,​ although you​ may get a​ slightly higher interest rate on​ account of​ declaring bankruptcy .​
You should also consider the​ Annual Percentage Rate (APR) and the​ loan fees that come along with the​ refinance loan .​

Refinancing after bankruptcy helps you​ to​ restore your credit profile .​
You can refinance your existing debts with a​ home equity loan that is​ often offered at​ a​ better rate than the​ other kinds of​ credit .​
Use of​ such credit for refinancing will help you​ to​ maintain a​ good payment history .​
With a​ refinance loan after bankruptcy you​ can thus rebuild your credit history and this helps you​ to​ qualify for loan programs with lower rates and payments.

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