Have you declared bankruptcy recently? Are you now willing to refinance your mortgage loan? If yes, it is very necessary for you to understand well the pros and cons of refinancing your mortgage after filing a bankruptcy. You can get your mortgage loan refinanced at least two years after filing for bankruptcy. A two-year long period seems no less than perpetuity. But, instead of just waiting for the period to end, you should exercise a little perseverance and discipline in these two years to avoid any problem when refinancing later.
Following are certain important things that you should do in these two years to prepare yourself for refinancing your mortgage loan:
1) As your credit report is the main indicator of your true worth as a borrower, you should work sincerely towards rebuilding your credit score. A Chapter 13 bankruptcy will be indicated on your credit report for 7 years, while a Chapter 7 Bankruptcy will be stated in it for 10 long years. In short, once you declare a bankruptcy, the bankruptcy blight stays on your credit report as a blot for several years. Therefore, if you really wish to refinance your mortgage, it is high time you take concrete steps to get your credit report back on a firm traction.
2) Avoid your bad debt management habits and make sure you start paying all your bills on time.
3) Convert your spending habits into saving habits. This will help improve your credit report, which also reflects your assets, to some extent.
4) If you find it difficult to ‘stop spending and start saving’, make use of the long-established strategies for saving money. For instance, opt for automatic deposit from your paycheck into a savings vehicle of your choice.
5) Make sure you pore over your credit report regularly. In case, you find any error, get in touch with your creditors immediately and resolve the discrepancies.
Thus, try to stay clean with your credit and try to build some assets in these two years. Once your credit is back on a solid footing, your next challenge is to find a good lender who can handle your loan. With the growing demand of money provisions of all sorts, lenders are budding everywhere like mushrooms in the financial world. Selecting a lender from such a big pool is as difficult as finding a needle in a hay stack! Moreover, most lenders who handle mortgage refinance after a bankruptcy charge a high interest rate. Therefore, it is in your own favor to compare and contrast different loan quotes from different mortgage brokers before taking a final decision. Without doing a good market survey, it is highly likely that you might fall for the commonly used ‘scare tactics’ by pushy, unscrupulous lenders.
Once you find a good lender and get your loan sanctioned, you start living with it. But, wait! That is not the end of the story. The bankruptcy blight is still there on your credit report and may cause problems later. Therefore, after getting your mortgage loan refinanced, it is advisable to get back into the rebuilding mode and make all the repayments in time. If you do so, then nobody can stop your financial situation from taking a complete 360-degree turn, and needless to say, you will have a great mortgage to prove it!