Do you have bankruptcy on your account? If so, you may not be able to refinance your mortgage. Can I refinance my mortgage after chapter 7?
What you should understand before refinancing
All bankruptcies are not equal in the eyes of mortgage lenders. Let’s take a look at some of the things you should consider before refinancing.
The difference between chapter 7 and chapter 13 Bankruptcy
The refinancing process after bankruptcy depends on the type of bankruptcy being reported. Let’s discuss the differences between the main types of bankruptcy: chapter 7 and chapter 13.
Chapter 7: Chapter 7, sometimes called traditional bankruptcy, releases your debts. Bankruptcy under Chapter 7 may allow you to release some types of debts, but you will not be able to wipe out things like student loans, child support and court orders. It may also require liquidation of part of your property. Chapter 7 bankruptcy stays on your credit report for 10 years.
Chapter 13: Bankruptcy under Chapter 13 does not deprive you of all your debt. However, this allows debt restructuring and property maintenance. This procedure may allow you to spread your payments over a longer period or repay only part of the loan. Chapter 13 bankruptcy leave the credit report after 7 years.
Prove that your finances are back on track
You can improve your position, but it requires time and a proven attempt to rebuild your loan. Although it is true that bankruptcy in Chapter 7 will leave a stain on your credit report for up to ten years, the effects of Chapter 13 should end after seven. Don’t let it break you down. If you make quick mortgage payments, you will soon return to a clean account, and your bankruptcy will be a thing of the past.
Your goal is to show that you can deal with your existing mortgage and living expenses. Don’t hinder opening new accounts.
How best to set up your app to refinance your home?
Here’s what you can do. Provide supporting documentation:
- You earn a safe income
- Your expenses are controlled
- Your household expenses are adequate
- Confirm secured debts
When it comes to refinancing, if you’ve already confirmed debts such as car loans and mortgages, you’ll be in a better position. Because. The last thing you want is for other debts to be a limiting factor that affects your entitlements. Some loan officers may decide that this is the complexity they want to avoid. If you think about it, you can always look for another lender. The only time we advise you not to confirm is when the current mortgage balance is higher than the market value of your home.