About Mortgages

What You Should Know About Bankruptcy Mortgage Refinancing

If you are a homeowner with a recent bankruptcy and have been putting off mortgage refinancing, a new mortgage loan could help you rebuild your credit. It is much easier today to get approved with a recent bankruptcy than in previous years; however, it will take some work on your part to avoid overpaying for the loan. Here are several tips to help you avoid overpaying when mortgage refinancing after bankruptcy.

Because you will be paying a higher mortgage rate due to your bankruptcy, it is important to shop from a variety of lenders for the most competitive offer. When you compare mortgage offers make sure you compare all fees and don’t get hung up on mortgage rates. Many people think choosing the loan with the lowest rate means they’ll get a good deal when mortgage refinancing. These homeowners overpay thousands of dollars because the neglected to take lender fees and closing costs into consideration when they picked a mortgage rate.

As soon as your bankruptcy is finalized apply for a credit card. You might think this is contrary to a lot of the advice your read regarding bankruptcy; however, it is crucial to establish a history of on time payments with a creditor as soon as possible after bankruptcy. This history of on time payments will help build your credit score. Being on time and maintaining a low balance on this credit card is the first step to rebuilding your credit.

If the mortgage lender you find is not requiring you to pay points for mortgage refinancing, consider paying a point or two to buy down your mortgage rate. Negotiate with your mortgage refinancing lender for lower rates and better terms. One of the most important aspects of your negotiations is that your loan must not include a prepayment penalty. Once you have build up your credit you will be refinancing this loan with a traditional mortgage lender and do not want to be hit with a hefty fee. Paying a point or two might not only get you a better rate but might convince your mortgage company to remove a prepayment penalty.

Getting approved for a new mortgage isn’t hard; the hard part is finding a good mortgage offer. Researching mortgage lenders and comparing a variety of mortgage offers will help you find the most competitive interest rates. When shopping for a mortgage compare all aspects of the loan offers: interest rates, annual percentage rate, lender fees, and closing costs all need to be carefully scrutinized before accepting a loan offer.

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