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Many people are under the false belief that once they have filed for bankruptcy then they can no longer refinance their mortgage. This just simply is not the case. Whether you have filed bankruptcy, or just plain have bad credit scores, it is always possible to find a lender to complete a mortgage refinance. In fact, you might be surprised to learn that you can even get a 100% financing mortgage the day after your bankruptcy!
| One of the most obvious mortgage options you have, if you have bad credit, is to deal with a sub-prime lender. These lenders offer mortgage programs specifically for those with bad credit or bankruptcy on their credit reports. The biggest issue in dealing with a sub-prime lender is that they will offer you very high interest rates and high closing costs in exchange for the risk of lending to you. This can make a sub-prime mortgage very expensive as an option. |
Another option you have after bankruptcy for obtaining a better mortgage refinance rate is by working to improve your credit. By working in your credit, for even a year or two, you can avoid dealing with the sub-prime lenders and get a much better loan package.
One of the biggest mistakes many people make after filing bankruptcy is to decide they will have a “cash only” life. While this can help with the spending problems which led you into bankruptcy, it does nothing to improve your credit on the other side of it. You need to improve your credit from the bankruptcy so that you will be able to get a good mortgage or refinance mortgage rate.
The easiest way you can start to build back up your credit is by applying for, and using, a couple credit cards with low minimums. You can apply for a traditional credit card, and if you are unable to obtain one then consider getting a secured credit card. Each month charge something on the cards, and then pay it off before the due date. By doing this for a year or two, you can improve your credit scores a lot.
Another good way to improve your credit score to try and get an after bankruptcy mortgage refinance, is to pull a copy of each of your credit reports and dispute anything you do not agree with. By cleaning up your credit report, to get rid of any negative errors, you will raise your credit score.
While working on improving your credit score, you will want to be working full-time at one employer. You should not change jobs during this time; you want to show a potential lender that you have job stability and a reliable source of income.
While you are cleaning up your credit and working a steady job, you will want to save as much money for your down-payment as possible.
By approaching a lender showing that you can now handle credit, you have cleaned up your negative credit scores, you have a steady stream of income to make your mortgage payments, and you have a large down-payment to offer, you can obtain a good mortgage refinance offer even after bankruptcy.
While you’re working to improve your credit, you should also be working full-time. But this is not the time to job-hop! When you apply for a mortgage or a mortgage refinance, lenders will see that you’ve got a steady and reliable source of income. Combine your steady employment with proof that you can handle credit responsibly and a down payment and mortgage lenders will be clamoring for your business!
When you’re reviewing your mortgage and mortgage refinance options, be realistic about how much house you can afford. Remember that closing is one thing, but making the monthly payments and being able to cover the costs associated with home ownership are what matters most. You certainly don’t want to end up back in bankruptcy court!
| More Information: Bad Credit Refinancing — Nearly everyone goes through a bad time financially at some point in their lives. Unfortunately this time can sometimes coincide with the need to obtain a mortgage or refinance an existing mortgage. Finding a good mortgage is still possible even with bad credit. Generally bad credit mortgage refinancing is easier than trying to find a lender for a primary mortgage. |
©2009 Best Refinance Mortgage Rates