If you file Chapter 7 bankruptcy as a homeowner with a mortgage, you’d have to reaffirm your debt. A reaffirmation of debts is a legal agreement between you and your creditor that holds you responsible for repaying a specific debt during and after bankruptcy. You have a better chance of getting a refinance if you filed for Chapter 13 bankruptcy and a lower chance with a Chapter 7 bankruptcy. Depending on your loan and bankruptcy type, you may need to wait anywhere from 1 day to 5 years after your bankruptcy discharges until you qualify for a refinance. Getting a Mortgage After Chapter 7 Bankruptcy Peoples Bank recognizes that purchasing a home, or refinancing an existing mortgage is a goal for many clients after they have completed their Chapter 7 Bankruptcy plan. Compared to other banks we have a department dedicated to helping borrowers obtain a mortgage after chapter 7 bankruptcy.
Related videosHow soon can you qualify for a mortgage after a Chapter 7 Bankruptcy?
Conventional mortgages: In most cases, you must wait four years from your bankruptcy discharge date before you can apply for conventional mortgage refinancing if you filed for Chapter 7 bankruptcy protection.
Under extenuating circumstances, however, that waiting period may decrease to two years. Unlike FHA or VA loans, conventional loans don't come with a government guarantee, which means they're considered a higher risk for lenders.
Therefore, the interest rates and credit score requirements may be higher, too. Here's how long you have to wait to refinance after Chapter 13 bankruptcy. FHA loans: You'll need to wait at least a year from the start of your payout period under Chapter 13 bankruptcy before you can apply for refinancing with an FHA loan. However, you must prove you made all your bankruptcy payments in full and on time during that year.
VA loans: The waiting period to refinance a VA loan after Chapter 13 bankruptcy is based on your filing date, not your discharge date. It's possible to refinance a VA loan one year after the filing date. Conventional mortgages: The waiting period for Chapter 13 bankruptcy will depend on whether your case was discharged or dismissed.
In the case of dismissal, which doesn't prevent creditors from collecting qualifying debts, you must wait at least four years to refinance, though under extenuating circumstances, you only need to wait two years. If your case was discharged, the waiting period is shortened to two years, regardless of the circumstances.
If you have filed more than one bankruptcy within the past seven years, you have to wait five years before you can qualify for any type of home loan, including refinancing. This is true whether you filed under Chapter 7 or Chapter Once that waiting period is up, you'll need to meet the same qualifications for a mortgage as any other borrower. Keep in mind that these waiting periods are only the minimum.
Since you are also subject to the lending requirements of individual banks, you may need to wait longer before you're eligible to refinance according to their standards. And if you're under Chapter 13 bankruptcy protection, you will need approval from the bankruptcy court and trustee to refinance, even if the lender approves refinancing. This ensures you're not taking on too much of a financial obligation while you're still paying on bankruptcy debts.
You might be able to find lenders that offer to refinance with a shorter post-bankruptcy waiting period than what's required for VA, FHA or conventional mortgages. But you should expect to pay for the privilege of refinancing outside of normal waiting periods: These loans may come with higher costs. If you've already been through a bankruptcy, it's generally not a good idea to take on an expensive loan. Rebuilding Your Credit After Bankruptcy.
Though you may have to wait to refinance after bankruptcy, that time can give you an opportunity to get your finances in order. Getting approved for refinancing requires much more than simply waiting -- you also need to reestablish credit, Khan says. In other words, you need to prove to lenders that the bankruptcy won't happen again.
So before you apply for refinancing, work on getting your credit in shape. Sign in. Sign in to view your mail. Finance Home. Casey Bond. Chapter 7 Bankruptcy Also known as liquidation bankruptcy, Chapter 7 bankruptcy involves selling off your assets to pay back your outstanding debts. Start your next chapter, and meet your mortgage goals today by connecting with us.
Speak with one of our Mortgage Consultants about getting a mortgage after Chapter 7 Bankruptcy. First off, you will speak with one of our Mortgage Consultants about your financial goals. Subsequently they will identify what you are looking to accomplish.
The consultation provides you with the foundation you need, in order to pursue the appropriate home loan product. We address the most common stumbling blocks that our Chapter 7 Bankruptcy borrowers face on the front end. At this point, you will complete the home loan application either online, on the phone, or in person. We are available to guide you through the application should any questions arise.
Following the application, we run a 3-in-1 credit report, and after careful review, we consult with you about a range of topics. This consultation will help us to verify accounts, as well as update any credit inaccuracies. This step is necessary to help identify common oversights that we see with our Chapter 7 Bankruptcy clients. Afterward with the help of our processing specialists, we gather all the necessary information required to submit your home loan request to underwriting.
As a result you have a partner during the information gathering process. Additionally, our team will receive a list of conditions from the underwriter that request further clarification. In order to specifically address problems associated with your Chapter 7 case. From here, the final documentation is collected, and final insurance and escrows are arranged.