Refinancing may refer to the replacement of an existing debt obligation under different terms. Refinancing after bankruptcy is not easy as taking out a new loan becomes hard as you do not have good credit rating. Obtaining a home loan after bankruptcy will depend on the other aspects taken into account during your mortgage application. It will heavily depend on your guaranteed income and the amount of money you have as a deposit. So your first steps will depend on your capability to provide both of these things.
Mortgage after Bankruptcy – Some Tips
Following bankruptcy many lenders will not lend to you for a period of at least two years from the time of the bankruptcy discharge. From this two year benchmark onwards obtaining a mortgage after bankruptcy will become much easier. The best way to ensure that this happens is to correctly manage all your debts from the time of bankruptcy discharge onwards. This means paying all of your repayments on time and building up your credit rating. Some other mortgage after bankruptcy tips include:
Timely Payment – Timely payment helps in improvement of your project.
Deposit – The chance of gaining a home loan after bankruptcy is increased by the amount of deposit which you have to put down on the house. As little as a 3-5% deposit may be enough to help you get approved.
Limit Further Debt – By limiting the amount of other debts such as credit cards or bank loans, you are increasing your chances of obtaining a mortgage after bankruptcy. Remember that your debt-to-income ratio will be evaluated by the mortgage providers, so all further debt should be limited as much as possible.
Credit Report Check – You need to check your credit report in order to insure that the account statuses are showing discharged through bankruptcy.
Home loan refinancing involves modified terms and conditions as you take out a new loan. As the terms of the loan get modified, it becomes easier to make the payments on the same. Therefore, you need not fear that you are going to default on the loan and thus lose your home too. The process of taking out a refinancing loan is same as that of taking out a new loan.