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How to Go About Refinancing Your Home Mortgage After Filing Bankruptcy

By Edited Nov 13, 2013 0 0

In just 4 months American citizen can get discharged from chapter 7. Home refinancing or bankruptcy mortgage is easy, especially if you have the required equity or down payment. The difference in the loans secured on your house and loans secured on the house is called home equity

Equity is Required for Home Refinancing After Bankruptcy

Equity is not only a guarantee for the lender and ensures the borrower is committed to repay the loan. If the borrower is unable to pay back then the lender can recover the amount through the equity. A typical bankruptcy mortgage discharge requires a house deposit of 25% to 30%, if you are able to raise this amount then you have a better chance at getting an approval.

In effect, the higher the amount paid as down payment the better the rate of interest offered by the lender. After the bankruptcy, a constant credit improvement can help you refinance at an affordable rate of interest. It is also possible to get a mortgage before you have fixed you credit but to get a better deal it is recommended to get you credit improved.

You Can Improve Your Credit Score for a Discharged Bankruptcy Mortgage

Elimination of any unsecured debt can affect you credit score and a low credit score is a disadvantage to home refinancing. According to Liz Pulliam-Weston of MSN Money, your credit report can show bankruptcy for a period of 10 years, in contrast your credit score can improve as soon as the case is closed.

After bankruptcy paying off all your debts on time, for both credit or store cards and loans such as mortgages, student loan and car finance, can help you rebuild your credit and refinance. Using a secured credit card can also help.

Your credit score will improve as long as you don't default on your payments, as the time period since your last default increases so will your credit score. You should also take a few other steps such as maintaining your credit utilization. Always use less than 30 % of your available credit limit. Don't close down any old credit accounts you have, instead use them occasional as it will have a good affect on your credit score.

Clean-up Your Credit Report Before Home Refinancing After Bankruptcy

The most important step you need to take before considering home refinancing is improving your credit report. Check your credit report for any error and correct any mistakes immediately. Lenders will not try to figure out the difference between bad data and bad credit so it is up to you to clear any discrepancies. Ensure that any debt that has been discharged by the bankruptcy agreement doesn't show up as active in your reports.

Every U.S. citizen is allowed a free copy of their annual credit report as stated by the Fair and Accurate Credit Transactions Act. It authorizes AnnualCreditReport.com as the only site that can provide your free report.



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