Bankruptcy Refinancing

Many people considering bankruptcy, or who recently went through bankruptcy, are concerned about bankruptcy refinancing also know as refinancing after bankruptcy.

There are varying circumstances on when you can refinance after bankruptcy. The biggest variables are the type of bankruptcy and your Loan to Value ratio in your home. A Chapter 13 bankruptcy stays on your credit report for seven years, while a Chapter 7 bankruptcy stays on your credit report for 10 years. However, having a bankruptcy on your credit report does not mean you can't refinance, just that it's more difficult and you won't be eligible for the best rates.

Most financial advisors will counsel you to wait two years before applying for a new loan. Within those two years, you can reestablish your credit score (make sure you stay current on your bills) to good standing and qualify for a Fannie Mae loan with market rates. However, you can find refinancing sooner by working with a sub-prime lender. Six months after your bankruptcy has been finalized, you can find lenders willing to refinance your mortgage. In fact, refinancing your mortgage may help rebuild your credit to good standing.

If you are lucky enough to have 30% or greater equity in your home, you have more options, you may be able to refinance right before or right after.

Tips For Bankruptcy Refinancing
Each situation is different, contact a bankruptcy lawyer and financial adviser to make sure you understand your options and take the right actions.

Open a bank account, either a checking or savings account and get a credit card. If you can’t get approved for an unsecured credit card, apply for a secured credit card and start using it and making regular payments. This will help you build a healthy credit history and get approved for a bankruptcy mortgage.

In most cases, if you are unable to refinance your home then you may be able to contact your current mortage company’s loss mitigation division to discuss options of loan modification. A loan modification is a refinance of your current loan amount with your mortgage company. There is not approval required to get loan modification while in bankruptcy however a letter authorizing your mortgage company to speak with you may be required by your attorney’s office.

Even if you are unable to refinance your home there are options available to you. You may be able to contact your current mortage company’s loss mitigation division to discuss options of loan modification. A loan modification is a refinance of your current loan amount with your mortgage company. Make sure you check with your lawyer first, although there is no approval required to get a loan modification, a letter authorizing your mortgage company to speak with you may be required by your attorney’s office.

And of course, to obtain a mortgage after bankruptcy make sure you make all your payments on time including your current home loan payments. This is very important since any late payments or missed payments may be the difference between you obtaining the home refinance you are searching for or not.

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