Refinancing After Bankruptcy

Establish good credit to prepare for refinancing

Generally you will have to wait six months after the discharge of your bankruptcy before refinancing. During this time it is crucial to start rebuilding your credit. A refinance itself will aid in rebuilding your credit within two years. However, in order to get a refinance, you need to start rebuilding your credit immediately after bankruptcy. You can accomplish this by beginning to make purchases on credit and make your payments on time. You can also build a savings account. Cash assets will increase the appeal of your application for a refinance to a lender.

Research and know your lenders

You will need to research lenders and refinance rates in order to make sure the lender you choose will provide the best deal available. The internet is a valuable source to use for these comparisons. You can often get online quotes for a refinance. The better deal will often have a higher interest rate, but lower fees. You will likely need to work with a sub prime lender due to your bankruptcy. Interest rates will typically be a few points higher than a traditional mortgage.

Choose the best refinance package for you

As part of a refinance, you may have the option to take some of your home's equity in cash. This would allow you to buy a new car or make improvements to your home like a traditional home equity loan. Keep in mind that leaving the equity in your home will improve your credit rating. After bankruptcy improving your credit rating is always an important consideration. This refinance will help to improve your developing credit and after two years you may be eligible for a lower interest rate through another refinance. If you have continued to build a solid credit history after bankruptcy, you should be able to obtain a refinance through a traditional lender.