When to Refinance After a Bankruptcy


Many borrowers with bad credit have learned the hard way how challenging mortgage refinancing can be after going through the bankruptcy process. Bankruptcy is a difficult thing to go through, and it has a number of negative repercussions that can be tough to reverse. However, while many people think it isn’t possible to refinance after a bankruptcy, this isn’t exactly true. Mortgage refinancing after a bankruptcy is possible, it just takes a bit of work and dedication. Here, we’ll go over some of the steps you’ll need to take in order to refinance after a bankruptcy, as well as how subprime mortgages can be used to your advantage in this scenario.

Finally Lenders Offering Refinancing Solutions for Borrowers After a Bankruptcy

The first thing you’ll want to focus on after a bankruptcy is restoring your credit. A bad credit mortgage loan can be obtained, but the lower your credit score, the more interest you will have to pay. Restoring your credit as much as possible should be a top priority. FHA loans, which are perfect for those that have gone bankrupt and want to start building good credit, have a minimum credit score requirement of 500. If you want an FHA home loan, the minimum score for a refinance loan is 580, although a direct endorsed FHA underwriter has the ability to make exceptions. FHA is great for refinancing and home buying, so learn more about how to buy a home with no money down and bad credit.

Mortgage refinancing after a bankruptcy is made easier by participation in certain programs that are designed to help those in exactly your situation. Once you have rebuilt your credit, you should work on finding a lender that is willing to work with you to refinance a mortgage after bankruptcy. Most of the lenders who are willing to do this are subprime lenders, and will charge higher interest rates and may even add fees. However, you do have the ability to do some comparison shopping, and find a lender that is willing to give you a fair rate. You do not need to take the first offer from a lender, either. There is often room for negotiation to make things work for you.

Save Money and Rebuild Credit Scores with New Bankruptcy Refinance Loans !

Once you have found a lender that offers post-bankruptcy options find out what their equity and credit requirements are. There are FHA and subprime lender willing to help you with mortgage rate refinancing, you can work on getting back on your feet. For many people, their mortgage is their biggest expense, so having a way to deal with this first is important after a bankruptcy. VA loans are also available to those that have been out of the housing market due to a bankruptcy, and can offer solid rates with low down payments. There are options available to you after bankruptcy, you just have to work for them.

No matter what type of loan you choose from, we recommend fixed rate mortgage refinancing, because you never know when the market changes for the worse. If you get stuck with a home loan it is important that it is a payment you can afford and a fixed interest rate ensures that the monthly payment will not rise.

The U.S. Department of the Treasury estimated that 8 to 13 million foreclosures will occur from December 2010 through 2012 unless lenders expand bad credit refinancing and note modifications for borrowers who are stuck with an option ARM loan or a variable rate mortgage. If you have exhausted all home refinancing options, consider mortgage relief. Many borrowers have had success with a short refinance or loan modification that essentially accomplishes the same goal as a refinance. The reality is that many banks would rather extend loan relief than go through with a foreclosure.  Each lender has a different policy when it comes to foreclosure prevention and refinancing after a bankruptcy, so you will have to talk to an experienced loan officer before throwing in the towel.

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