You will be required to make payments on your home and other debts when you file bankruptcy. It is possible to wonder how you can comfortably continue these payments while adhering to your bankruptcy plan. Refinancing a mortgage can be a good option for many people who are going through a chapter 13 bankruptcy. Before you decide to refinance your mortgage, it is important that you fully understand the loan type and restrictions that may apply depending on which type of bankruptcy you have filed. Can I refinance after bankruptcy? What are your best refinance and bankruptcy options?
You will likely have to wait longer to refinance if you file Chapter 7 bankruptcy. You may be eligible for a government-backed loan if you file Chapter 13 bankruptcy. The waiting period for loans that are backed by the government, such as VA or FHA, is approximately two years after discharge. For conventional loans, you will need to wait for four years after your Chapter 7 bankruptcy is discharged. However, conventional mortgage loans for refinancing are only available for two years. Refinance of your mortgage will be difficult if your chapter 13 bankruptcy is not dismissed.
While there are many ways to reduce waiting times, many people opt to rebuild their credit before looking into financing options. Rebuilding your credit can help you qualify for a lower rate of interest when you refinance.
Even if you aren’t involved in an active bankruptcy case and only thinking about filing, you should consider the impact on your financial future. You may have to wait several years before you can apply for the loan you need for auto financing, home financing, or personal loans. The right type of bankruptcy can help you cut down on the time it takes to get back on your feet and be able to apply for a loan again. A secured credit card, which allows you to take advantage of the period you are unable to qualify for a loan or mortgage, can help you save money once you have the ability to borrow money or use financial products such as mortgage refinancing. You can rebuild your credit and prove that you are able to use a secured card. This will help you through the bankruptcy process.
It is important to follow your Chapter 13 bankruptcy repayment plan. After you have reached an agreement for Chapter 13 bankruptcy, you must ensure that you make regular payments and are not in danger to default on your payments. Your agreement may be terminated if you fail to make your payments on time. This could result in you being unable to borrow the money again. By sticking to your repayment plan, you will be able to qualify for loan options sooner and enjoy a shorter repayment period after bankruptcy.
You should stick to your repayment plan and avoid lenders that offer refinance options faster than the normal guidelines. You can still get subprime loans even if you have a bankruptcy. These lenders can offer financial products to you because they have a higher interest rate, and take on clients who have had a recent bankruptcy. Due to the higher cost of the loan, lenders who offer refinance options right after a bankruptcy filing will often make you more indebted. These options are not always a good choice. They could damage your credit rating and put you in a financial predicament that could lead to another bankruptcy. It is often better to wait and not incur additional costs. Instead, choose a lender who will offer the funds upfront.
A professional local bankruptcy lawyer is recommended if you are considering bankruptcy. An attorney can help you understand your options and how bankruptcy affects your refinance process. It is important to be informed about your bankruptcy status and how it will impact your financial future in order to maintain a solid financial plan. For more information, contact us