Mortgage Refinancing After Bankruptcy

Bankruptcy is perhaps the worst financial situation someone can deal with, often resulting in the loss of property, loan/credit card defaults and the subsequent the destruction of the credit score, and sometimes even unemployment. If you were fortunate enough to avoid foreclosure after bankruptcy and you are still making monthly payments towards your mortgage, you may be considering mortgage refinancing after bankruptcy. Although many experts will recommend against refinancing your mortgage shortly after bankruptcy because it creates an additional financial burden, it may be beneficial in some cases, especially if it is done the right way. However, it can also be completely futile to attempt mortgage refinancing after bankruptcy, particularly if your credit score has been damaged. If you’re thinking about refinancing your mortgage to obtain lower monthly repayments, consider the following information.

When to Consider Mortgage Refinancing after Bankruptcy
It may be possible to obtain mortgage refinancing before lenders and financial institutions realize that you’ve recently filed for bankruptcy (before the bankruptcy has had a significant detrimental effect on your credit score). If you are planning on applying for mortgage refinancing after bankruptcy in hopes that your credit score has not yet been damaged, it is advisable that you do so before six months have passed after you file for bankruptcy, and to conduct a credit check to ensure that your credit score is still acceptable. If you find that your credit score has already been damaged by the bankruptcy then it is best to do everything you can to rebuild your credit and wait until the credit score improves so that you can maximize your chances of receiving refinancing with an appealing fixed rate. Of course, the entire purpose of refinancing is to obtain lower monthly repayments, which is not possible if you have a poor credit score. It should be noted that individuals who have petitioned for chapter 13 are not required to wait for a specific amount of time before they can file for mortgage refinancing, as long as they can show that they have been meeting their monthly financial obligations on time, and as long as they’re credit score is reasonable.

How Will Mortgage Refinancing after Bankruptcy Affect the Mortgage Terms and Conditions?
Since bankruptcy will ultimately cause your credit score to be detrimentally affected, it will also cause the terms and conditions offered on mortgage refinancing to be much less appealing. In fact, filing for bankruptcy often completely negates the benefits of mortgage refinancing, and it may be completely pointless to apply for mortgage refinancing after bankruptcy if your credit score is already significantly damaged. In fact, if you make the mistake of refinancing after filing for bankruptcy and did not pay close attention to the terms and conditions offered by your lender, you may end up paying higher monthly payments than those being made before you file for bankruptcy. In addition, if your credit score has been damaged because of the bankruptcy you may also have to pay additional fees and closing costs in order to refinance.

How to Simplify the Process of Mortgage Refinancing after Bankruptcy
If your credit score has not yet been damaged, or you have rebuilt it to the point that you are confident you can obtain decent mortgage terms and conditions, you can simplify the process of mortgage refinancing after bankruptcy by prequalifying for loans. Prequalifying is basically the process of hypothetically applying for a loan to find out the types of rates and terms that will be offered if you proceed with the mortgage refinancing. Doing this can save you a great deal of time and effort, and it often takes less than 24 hours to receive a rate quote from lenders that offer free consultations and pre-qualifications.