One of the best options to refinance your home after a bankruptcy is an FHA loan. FHA loans can be approved in as little as two years after bankruptcy, have low equity requirements and attractive interest rates for borrowers with flawed credit. You don't even have to currently have an FHA mortgage to refinance into an FHA loan. A mortgage refinance involves taking out a new mortgage to replace your existing loan, so you’ll essentially need to meet the same minimum requirementsexpected of someone getting a home loan after bankruptcy. Conventional mortgages after bankruptcy – 4 year waiting period after chapter 7 and 2 years after chapter 13 Non-QM Subprime Mortgages – Available just one day out of bankruptcy. Depending upon your scenario, we can find a mortgage for you just ONE DAY after your bankruptcy .
Related videosPersonal Finance : How to Refinance a Home After Bankruptcy
A Chapter 13 bankruptcy will be on your report for seven years, while a Chapter 7 will stay with you for ten. But don't despair. There are concrete steps that you can take to get your credit back on solid footing. At the top of the list is avoiding the type of habits that are generally associated with a bankruptcy. Translation: Pay your bills on time.
A credit report also reflects your assets, so you should morph your spending habits into saving habits. Employ time-honored tactics like using automatic deposit from your paycheck into a savings vehicle of your choice. You should also scrutinize your credit report. Make sure it's accurate, and if you find any mistakes, work with your creditors to clear up any discrepancies.
Though a bankruptcy itself will stay on your credit report for years, the worst effects on your credit itself are only for the first few years. So don't count yourself out before you get started -- you may be able to refinance after a bankruptcy sooner than you think. The financial world is crawling with lenders, but there are only certain ones who will refinance a mortgage after a bankruptcy.
Many of these are subprime lenders, who will charge you a higher interest rate and tack on fees to handle your loan. Don't fall for any scare tactics from pushy lenders. While the pool isn't deep, there are enough of them out there to allow you to shop around. Scrutinize rates and especially fees, which certain unscrupulous mortgage brokers will be happy to pump up at your expense.
One of the best options to refinance your home after a bankruptcy is an FHA loan. FHA loans can be approved in as little as two years after bankruptcy, have low equity requirements and attractive interest rates for borrowers with flawed credit. Eventually, you'll find a lender and a loan that you can live with. At that point, you'll want to return to rebuilding mode.
Stay clean with your credit, and continue to build up your assets. The fact that it is no longer being reported to credit agencies doesn't mean there isn't still a lien on the home.
Lenders have the option to work with borrowers who reaffirm the loan during the bankruptcy, but they often choose not to. If the property was not reaffirmed during the bankruptcy, lenders are not allowed to refinance their own loan because it violates federal bankruptcy laws.
You have the option to seek another lender who will consider the loan. This becomes the only option for many homeowners. You may be stuck with your loan provider until other lenders deem you eligible for a loan. It typically takes two years of bankruptcy seasoning to become eligible for refinancing.
There are a couple of exceptions. For borrowers in Chapter 13 repayments, 12 months of complete and timely payments are sufficient for eligibility. Note that you need court approval while you are in Chapter 13 repayments. Similarly, those who completed Chapter 7 and can prove the financial problem was the result of something completely out of their control can get an exception for a month eligibility. You must have the credit and debt-to-income numbers necessary to qualify for the loan.
This can be tricky if you just had your credit hit with a point potential drop due to bankruptcy. There are federal loan programs such as the Federal Housing Administration loan that have low credit requirements starting at Better rates and equity positions are available for borrowers with FICO scores of and higher. Keep your debt payments to less than one-third of your monthly income.
Pay all bills on time to get your credit score back up to creditworthy standards. Prepare explanations for lenders about the bankruptcy and what you have done to make sure it doesn't happen again. Before becoming a full-time writer, she worked for major financial institutions such as Wells Fargo and State Farm. She currently lives in her home state of Hawaii with her active son and lazy dog.