Refinancing After a Bankruptcy in this day and age can be a truly challenging process, although if you have the right plan of action and know a few of the secrets that I'll let you in on it is possible to refinance a home.
Depending on the type of bankruptcy someone has gone through and whether or not a foreclosure was part of it will play a major part in the eligibility time frame requirements you must wait before being considered a possible candidate for a refinance.
In other words, roughly speaking if you have had a chapter 7 bankruptcy with no foreclosures then normally the waiting period is 2yrs. If you have had a foreclosure then it will be 3yrs, keeping in mind with this crazy lending atmosphere we are currently in.
Things change all the time so when you begin your process make sure to check with a loan officer for their most current lender updates to regulation on the matter. As a side note some financial institutions may have different rules or interpret them differently. It seems crazy sometimes but it happens all too often.
Extremely Important Home Loan Points to Follow
When preparing for a refinance with a past bankruptcy the first thing you want to do is look at your credit report, Checking the score and what is actually reporting on it. Many times, especially with a bankruptcy you will find multiple errors on the credit report such as items on the bankruptcy not showing that they were included in the bankruptcy on the report and therefore making a further negative impact on your credit, which of course you don't want.
Items contained in a bankruptcy when reported correctly tend to not affect the overall scoring as bad. It they are not showing on the credit report as included in the bankruptcy they seem to impact the score more negatively.
Review your credit report against your list of items that was included in the bankruptcy which you can normally find in the paperwork you received from the bankruptcy. Make sure that everything matches and if not submit a dispute online to the credit bureaus to remove the item completely or update it ( yes you can ask for it to be totally removed if it was reported incorrectly many times they will ).
If you need to know where to get a copy of your credit report you are allotted a free report once a year from annualcreditreport.com but it does not include a score, you can pay extra for that if you wish.
How High Does Your Credit Score Need to Be When Recovering for Damaged Credit?
What you'll typically find is that lenders really want to see scores at or above a 620 level with no delinquencies showing on the credit report after the bankruptcy or foreclosure but, I must emphasize that this is typical and not cut in stone. The reason behind me saying this is to give you realistic estimates that you can use as a gauge.
It is possible to get by with a 580 (speaking about FHA loans) but normally when you have a credit score less than the 620 level there is not enough reestablished positive credit reporting on credit report. Many lenders require several accounts with 12 months or more history.
Now in case you are reading this and have damaged and or dented credit but never a bankruptcy or foreclosure and you want to purchase a home or refinance, it is possible to do this with a 580 score and in rare cases as low as a 530. What you must understand is that in any instance where the credit is below the normal industry standards the more in depth the lender will examine the credit and the file.
This sometimes equals to providing more documents and often showing you have a few months worth of monthly mortgage payments saved up for emergencies.
Refinancing after Bankruptcy Final Notes
It is very possible to re-establish yourself after a bankruptcy if you set up a plan and follow it through. If your goal is to purchase a home you can surely do it. Just assess your situation and follow some of the steps above that pertain to you and eventually you'll be in a position to reach your goal.
On the other hand if you do nothing and just hope your credit gets better, never taking action to reestablish yourself it won't happen on its own. I know you may not know me from Adam but I've been in the mortgage business for a while and I have seen many, many people get back on their feet after a bankruptcy and so can you. I'll be rooting for you so now make a plan and take action.
Depending on the type of bankruptcy someone has gone through and whether or not a foreclosure was part of it will play a major part in the eligibility time frame requirements you must wait before being considered a possible candidate for a refinance.
In other words, roughly speaking if you have had a chapter 7 bankruptcy with no foreclosures then normally the waiting period is 2yrs. If you have had a foreclosure then it will be 3yrs, keeping in mind with this crazy lending atmosphere we are currently in.
Things change all the time so when you begin your process make sure to check with a loan officer for their most current lender updates to regulation on the matter. As a side note some financial institutions may have different rules or interpret them differently. It seems crazy sometimes but it happens all too often.
Extremely Important Home Loan Points to Follow
When preparing for a refinance with a past bankruptcy the first thing you want to do is look at your credit report, Checking the score and what is actually reporting on it. Many times, especially with a bankruptcy you will find multiple errors on the credit report such as items on the bankruptcy not showing that they were included in the bankruptcy on the report and therefore making a further negative impact on your credit, which of course you don't want.
Items contained in a bankruptcy when reported correctly tend to not affect the overall scoring as bad. It they are not showing on the credit report as included in the bankruptcy they seem to impact the score more negatively.
Review your credit report against your list of items that was included in the bankruptcy which you can normally find in the paperwork you received from the bankruptcy. Make sure that everything matches and if not submit a dispute online to the credit bureaus to remove the item completely or update it ( yes you can ask for it to be totally removed if it was reported incorrectly many times they will ).
If you need to know where to get a copy of your credit report you are allotted a free report once a year from annualcreditreport.com but it does not include a score, you can pay extra for that if you wish.
How High Does Your Credit Score Need to Be When Recovering for Damaged Credit?
What you'll typically find is that lenders really want to see scores at or above a 620 level with no delinquencies showing on the credit report after the bankruptcy or foreclosure but, I must emphasize that this is typical and not cut in stone. The reason behind me saying this is to give you realistic estimates that you can use as a gauge.
It is possible to get by with a 580 (speaking about FHA loans) but normally when you have a credit score less than the 620 level there is not enough reestablished positive credit reporting on credit report. Many lenders require several accounts with 12 months or more history.
Now in case you are reading this and have damaged and or dented credit but never a bankruptcy or foreclosure and you want to purchase a home or refinance, it is possible to do this with a 580 score and in rare cases as low as a 530. What you must understand is that in any instance where the credit is below the normal industry standards the more in depth the lender will examine the credit and the file.
This sometimes equals to providing more documents and often showing you have a few months worth of monthly mortgage payments saved up for emergencies.
Refinancing after Bankruptcy Final Notes
It is very possible to re-establish yourself after a bankruptcy if you set up a plan and follow it through. If your goal is to purchase a home you can surely do it. Just assess your situation and follow some of the steps above that pertain to you and eventually you'll be in a position to reach your goal.
On the other hand if you do nothing and just hope your credit gets better, never taking action to reestablish yourself it won't happen on its own. I know you may not know me from Adam but I've been in the mortgage business for a while and I have seen many, many people get back on their feet after a bankruptcy and so can you. I'll be rooting for you so now make a plan and take action.
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