Refinancing after bankruptcy

by Vic Bassey

Individuals that have a bankruptcy on their credit history may feel that refinance after bankruptcy is impossible. While refinancing after bankruptcy does present a handful of additional obstacles, it is still a viable option. A home refinance after bankruptcy may require a little more effort, but it is an excellent way for an individual to improve their financial situation.

Can you refinance after a bankruptcy

Many homeowners that have filed for bankruptcy do not have an in-depth understanding of the rules regarding their existing mortgage. In addition, there is a vast amount of misinformation circulating in regard to refinancing after bankruptcy discharge. Once the bankruptcy has been discharged, no waiting period is required in order to refinance after Chapter 7 bankruptcy. Obtaining a refinance after Chapter 13 bankruptcy, however, does require a waiting period. Since Chapter 13 requires a repayment plan, the bankruptcy laws require that the homeowner establish a sufficient payment history in regard to the bankruptcy. Fortunately, this waiting period may be as little as six months depending on the facts and jurisdiction of the case. An experienced finance professional can help homeowners determine their eligibility for refinancing.

Mortgage refinancing after bankruptcy requires the homeowner to take some extra steps at the outset to improve their opportunity for success. Taking a few months to concentrate on improving the individual’s credit score is one of the best ways to increase the likelihood that a refinance will be approved. This may be accomplished by paying down debt on revolving credit lines and ensuring that all debt payments are made in a timely manner. Another method for improving the probability that a lender will approve a loan is to set aside money in a savings account. Lenders are more likely to approve loans to homeowners that can provide evidence of financial reserves.

Benefits of a mortgage refinance after a chapter 7 bankruptcy

Obtaining a mortgage refinance after bankruptcy can be of great benefit to homeowners that have endured financial difficulties. For example, if the homeowner filed for Chapter 13 bankruptcy, the equity in the home may be used to accelerate the payment plan. An accelerated payment plan may allow the bankruptcy to be discharged early. Additionally, homeowners may take advantage of lower interest rates or longer repayment terms by refinancing their mortgage. By doing so, homeowners may be able to decrease their monthly mortgage payments. The extra money each saved each month could then be used by the homeowner to repair their credit.

Refinancing home after bankruptcy is certainly obtainable with the right information and assistance. Finding a qualified finance professional can make the process much easier as their knowledge and expertise of the mortgage refinance industry will be invaluable.

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