|
Refinancing Your House After
Bankruptcy.
Have you filed
bankruptcy
since you bought your
home? Are you now looking to
take advantage of lower interest
rates by refinancing your home?
Although it is not impossible you will probably soon realize
how much more difficult it is to
finance or refinance a home
after a recent bankruptcy. There are
many companies online that will
help you refinance your home.
Here are some
tips to consider when
refinancing after a bankruptcy:
Even though
interest rates have dropped, you
may not be able to get a lower
interest rate than when you
bought initially - If you had
decent or good credit when you
bought your home originally, you may not qualify for an interest
rate any lower than you had when
you bought your home originally.
With a recent bankruptcy, your
interest rate is going to be
quite a bit higher than before.
There are many mortgage
calculators available online
that will help you analyze your
current payment and interest
rate and tell you if would be
better for you to refinance your
home or not.
Watch out for
pre-payment penalties. Even if
you can qualify for an interest
rate that is lower than what you
currently have, make sure you
don't get yourself into a loan
with a pre-payment penalty. If
you have a loan right now free
and clear of any pre-payment
penalties, it would be a big
mistake to lock yourself into
another loan for 6 months to 3
years or more. If interest rates
drop again or you need to move,
you will have to pay about 6
months of payments or interest
in order to get out of the loan
with a pre-payment penalty. Beware of
predatory lenders! There are
many lending scams on the rise,
make sure you are dealing with
reputable mortgage lenders.
Watch out for signs of shady
lending practices.
Shop around.
Get loan offers from at least 3
lenders. This is a good rule of
thumb with any bad credit loan.
When you can get multiple loan
offers, you can compare interest
rates and fees. Make sure you do
not accept the first loan
offered to you.
Personal Loans
After Bankruptcy.
If you want to
qualify for a personal loan
after bankruptcy there are four
key areas that will determine
how successful you are:
1) Your credit
score
2) Collateral
3) Existing debt
4) Time
Let’s look at
each factor in more detail and
how they can help you increase
your chance of qualifying for a
personal loan after bankruptcy:
1) Credit score:
In order to qualify for a
personal loan after bankruptcy
you will need to meet the
lender’s minimum credit score
criteria, provided the lender
extends loans to individuals
with a recent bankruptcy. You’ll
want to find out before applying
for a loan. Ask the
lender if they consider
applicants with a bankruptcy on
their credit report. Let’s
suppose the lender does. How can
you increase your credit score
enough to qualify for a personal
loan after bankruptcy? The first
step is to order copies of your
credit reports from the three
major credit reporting agencies
(Experian, Equifax, and Trans
Union). Next, make sure any
inaccurate or obsolete negative
information on your credit
reports is removed or updated.
This is covered in detail on After
Bankruptcy Credit Solutions.
Also explained is how to legally add
positive lines of credit to your
credit reports, which is a very
powerful way to increase your
credit score.
2) Collateral:
Another major factor in
obtaining a personal loan after
bankruptcy is how much
collateral you have. Why?
Because if a lender has
collateral that they can go
after (i.e., equity in your
home) should you default on the
loan, that reduces their risk
dramatically. So if you can
provide collateral to the
lender, it can increase your
chances of qualifying for a
personal loan after bankruptcy.
3) Existing
debt: You don’t want to have too
much debt when you apply for a
personal loan after bankruptcy.
If you do, the lender may feel
you don’t have the capacity
(enough income) to cover the
loan payment, because you have
too many other monthly expenses
to pay (i.e., credit cards, auto
payment, etc.) – as a result you
could get turned down for a personal
loan after bankruptcy. You
should find out if the lender has
a minimum income requirement, or
debt-to-income ratio you need to
meet. If they do, make sure you
meet their minimum requirement
before you apply for the loan.
4) Time: It’s
been said that “time heals all
wounds”. When it comes to
obtaining a personal loan after
bankruptcy this can certainly be
true if you’ve developed a
positive payment history since
your bankruptcy.
When a lender is
deciding whether or not to
extend you a personal loan after
bankruptcy, your credit report
will play a major role.
Generally speaking, if your
credit report reflects a
positive payment history for at
least two years since your
bankruptcy, it will certainly
help in your chances. We have
covered the four
major factors that
determine whether or not you
may qualify for a personal loan
after bankruptcy: Your credit
score, collateral, existing
debt, and time. If
you can strengthen each one of
these you will certainly increase your chances
of being approved for a personal
loan after bankruptcy. Even if
you don’t qualify for a personal
loan immediately after filing
for bankruptcy, don’t be
discouraged! Remember, time does
heal all wounds when it comes to
qualifying for a personal loan
after filing for bankruptcy. Just
be sure
to focus on increasing your
credit score, pay your existing
bills on time, not taking on too
much debt, and building up your net
worth.
|