Refinancing After Bankruptcy - Tips For Getting Approved
Refinancing after a bankruptcy can be your first step toward
reestablishing your credit. With your loan secured by your home,
you can qualify for relatively low rates. Improving your
application with time, assets, and terms will also help lower
rates.
1. Get Your Credit Report In Order
Before starting your search for a refi lender, make sure that
your credit report is up to date and accurate. Often with a
bankruptcy discharge, there can be mistakes or errors regarding
account standings. To qualify for the best rates, it's important
that all information is correct. Notify the reporting agency if
you notice any problems.
You can get a free copy from one of the credit reporting
agencies or through a credit monitoring company. At this time
you may also want to request your credit score to see where you
stand. Scores of 650 or above qualify you for conventional
rates, while anything below falls into subprime lending.
2. Enhance Your Application
Time is the best way to decrease the significance of a
bankruptcy. Optimally, waiting two years allows you to qualify
for conventional mortgage rates. But even waiting six months to
a year can trim two to four points off your loan.
Other ways to boost your qualifications is to have little debt,
significant cash reserves, and a large income. Selecting
favorable terms, such as an adjustable rate mortgage, can also
help.
If you simply want to cash out your equity, look into other
types of loans, such as a line of credit or a second mortgage.
These types of credit have lower closing costs with different
tax deduction benefits.
3. Search For The Best Financing Offer
Almost any one can get approved for refinancing, even after a
bankruptcy. What you really want to focus on is getting the best
financing offer. So extend your search to include regional names
and broker recommendations.
Ask for loan estimates on rates and closing costs. Compare the
numbers and read the details. Select only the loan that offers
you the best deal possible. The time invested now will pay you
dividends in savings for years to come.