Refinancing after a bankruptcy can seem like a challenge, but it doesn’t have to be. Within six months after your bankruptcy has been finalized, you can find lenders willing to refinance your mortgage. In fact, refinancing your mortgage can help rebuild your credit to good standing in two year’s time. The following steps will help you find the best refinance lender while helping your rebuild your credit record.
Step One: Refinancing Preparations
Immediately after you file bankruptcy, you have six months to prepare to refinance your mortgage. FIRST, begin by establishing good payment history by regularly paying your bills and current mortgage. This is also a good time to open a credit card account to start establishing good credit history. If possible, also start building up a savings account. The more cash assets you have, the better your application will look.
Step Two: Research Refinancing Lenders
Once you are ready to refinance, research mortgage lenders and their rates. Comparison shop with our refinancing after bankruptcy lenders. Once these refinancing lenders offer you interest rates and fees with their refinancing quotes - be sure to look over and compare. In most cases -- a slightly higher rate with low fees is the best deal.
With bankruptcy on your credit report, you will typically need to work with a subprime lender. You can expect to pay a few percentage points above a traditional mortgage, which you can find through online mortgage companies.
Step Three: Choosing Your Refinancing Package
You may be offered a chance to cash out part of your home’s equity when refinancing after bankruptcy on your home mortgage loan. If you need to make home improvements or buy a car, this may be a good option. However, if you keep your home’s equity in place, you are improving your credit.
Once you have decided on your terms, you can finish your loan application online or through the mail. Quotes are not guaranteed, so rates may vary slightly once your application has been approved. Before the refinance loan after bankruptcy is finalized though you have the opportunity to review the loan again.
Step Four: After Refinancing
With your refinancing completed, you can plan to lower your interest rates by refinancing in two years by building up your credit score. Continue to make regular payments and add to your cash reserves. Before you apply to refinance again, review your credit report to be sure your bankruptcy closed all past accounts on your record. With a solid credit history behind you, you can apply to traditional mortgage lenders.