People tend to think that it's hard to get a refinance loan after filing for bankruptcy. But you can get a home loan if you are willing to pay a slightly higher interest rate. Most of the time, lenders don't want to take the risk of giving mortgages to people who have gone through bankruptcy. But there are subprime lenders who will give you loans with higher interest rates, sometimes even after you've finished your bankruptcy and it's been six months.
Filing for bankruptcy hurts your credit score because it shows that you can't pay off your debts. A Chapter 7 bankruptcy stays on your credit report for at least 7 years, while a Chapter 13 bankruptcy stays on the report for 10 years. But this doesn't mean you won't be able to get credit; you just won't be able to get a good rate.
Most lenders in the primary mortgage market won't even think about giving you a loan until 2 years after you've filed for bankruptcy. But you have to pay your bills on time during this time. With a Chapter 13 bankruptcy, you have to follow a payment plan to get out of debt within 3 to 5 years. This will help you rebuild your credit score. Chapter 7 bankruptcy doesn't make this easier because it lets you get rid of all your debts and you don't have to pay back any of your unpaid credit. But Chapter 13 bankruptcy lets you keep paying some of your debts, including the mortgage, so you can show that you can be trusted.
Within 2 years of filing for bankruptcy, one way to get good credit is to open a credit card account and make payments on time. Your credit score will go up if you do this. You should also try to save money, since having more cash on hand is always better. You could also look for a second job to help pay off the debts that don't go away when you file for bankruptcy. If you want to refinance after bankruptcy, you must keep your credit profile in good shape.
When you have a good credit history, try to get mortgage quotes that you can afford. If you've been bankrupt, you may get a slightly higher interest rate, though. You should also think about the loan's Annual Percentage Rate (APR) and any fees that come with it.
Refinancing after filing for bankruptcy helps you get your credit back on track. You can pay off your other debts by taking out a home equity loan, which often has a better interest rate than other types of credit. You can keep a good payment history if you use this kind of credit to refinance. With a refinance loan after bankruptcy, you can rebuild your credit history, which makes you eligible for loan programmes with lower rates and payments.
