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How Can I Refinance My Mortgage After Bankruptcy?

Refinancing Mortgage After Bankruptcy

Refinancing a mortgage after bankruptcy is definitely a possibility and sometimes a preferred option for debtors who have adjustable rate mortgages due to reset soon. One of the biggest obstacles that debtors will need to overcome is a negative perception of their credit report by finance companies who may want to push them into subprime mortgages.

Below are a few tips on how a post-bankruptcy debtor can overcome this negative perception of their credit report:

  1. Immediately after receiving a bankruptcy discharge, a debtor should begin rebuilding their credit.  The first easy step they can take is to apply for a secured credit card and begin making regular payments.  The credit card issuer will report the credit card payment history to the credit bureau which will begin the process of rebuilding their credit.
  2. Continue making on-time mortgage payments after the bankruptcy discharge. Having a good mortgage payment history reported on their credit report will go a long way in convincing mortgage refinance companies that the debtor is a good credit risk.
  3. If the debtor has a car note, they should continue to make payments on that car note in a timely fashion. Timely payments to their car finance company are another indicator to future refinance companies that the debtor may be a good credit risk.
  4. Wait at least six months to a year after their bankruptcy discharge to apply for a mortgage refinance. By waiting this time period, the debtor will give their credit report time to record their new positive payment behavior.
  5. Accumulate a good amount in a savings account after the bankruptcy discharge.  A debtor with a healthy savings account is more likely to convince finance companies that they are in fact a good credit risk.