Bankruptcy is the last resort for many homeowners who find themselves in financial trouble. It can help you get out of debt, but it can also make it difficult to get a loan or refinance your home. However, there are options available for homeowners who have filed for bankruptcy and want to refinance their home.
What is Bankruptcy?
Bankruptcy is a legal process that allows individuals or businesses to eliminate or repay their debts under the protection of the bankruptcy court. There are two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is also known as “liquidation” bankruptcy, while Chapter 13 is known as “reorganization” bankruptcy.
How Bankruptcy Affects Home Refinancing
Bankruptcy can make it difficult to refinance your home because lenders see it as a risk. However, there are still options available for those who want to refinance their home after bankruptcy.
If you have filed for Chapter 7 bankruptcy, you will have to wait at least two years before you can refinance your home. However, if you have filed for Chapter 13 bankruptcy, you may be able to refinance your home while you are still in the process of repaying your debts.
Bankruptcy Home Refinance Options
There are several options available for homeowners who want to refinance their home after bankruptcy:
1. FHA Streamline Refinance
The FHA Streamline Refinance program is designed for homeowners who have an FHA loan and want to refinance their home. This program does not require an appraisal or income verification, making it easier for homeowners who have filed for bankruptcy to qualify.
2. VA Interest Rate Reduction Refinance Loan
The VA Interest Rate Reduction Refinance Loan (IRRRL) is designed for veterans who have a VA loan and want to refinance their home. This program does not require an appraisal or income verification, making it easier for veterans who have filed for bankruptcy to qualify.
3. Conventional Refinance
A conventional refinance is a traditional refinance that requires an appraisal and income verification. This option may be more difficult for homeowners who have filed for bankruptcy, but it is still possible to qualify.
Benefits of Bankruptcy Home Refinance
Refinancing your home after bankruptcy can provide several benefits, including:
1. Lower Monthly Payments
Refinancing your home can lower your monthly mortgage payments, which can help you save money each month.
2. Lower Interest Rates
Refinancing your home can also lower your interest rates, which can help you save money over the life of your loan.
3. Consolidate Debt
You can also use your home equity to consolidate your debt into one monthly payment, which can make it easier to manage your finances.
Conclusion
Bankruptcy can make it difficult to refinance your home, but there are still options available for homeowners who want to get back on track. By refinancing your home, you can lower your monthly payments, lower your interest rates, and consolidate your debt into one monthly payment. Talk to a lender today to see if you qualify for a bankruptcy home refinance.