Amount of Equity Required for Home Refinancing post Bankruptcy

Know the ways to refinance your mortgage after bankruptcy

By Anya Bennett

Getting a mortgage or home refinancing can be unexpectedly easy despite recent filing of bankruptcy. You can be eligible for refinancing your mortgage after your bankruptcy procedure. A sufficient down payment or equity in your property is the only criterion to refinance your mortgage. Subtracting the loan amount after evaluating the value of the house is considered to be your home equity.

Raising money for a house deposit can be a challenging task. As after bankruptcy, the lenders can raise a question on your creditworthiness. They think there is a high chance of the borrowers to default on the payment. Therefore, to safeguard their business interests the lenders require this equity.

Try to look for other debt relief programs in order to eliminate your debts as the effect on your credit report will be less damaging than filing bankruptcy. But here are various ways to lower the impact of bankruptcy on your credit report so that you can easily refinance your mortgage after bankruptcy.

Equity is not only a sign of commitment on the part of the borrower but also helps to lower the risk of the lenders in case of default in payment. At least 25% to 30% house deposit is required if you are keen to get approval for mortgage post bankruptcy.

Your interest rate on the mortgage will be inversely proportionate to the down payment amount. You can refinance your mortgage at an affordable interest rate if you repair your credit report after bankruptcy. Filing of bankruptcy might not create impediment while applying for mortgage but improved credit report might give you a favorable results.

Repair your credit score after bankruptcy:

Your credit score might plummet with the stigma of bankruptcy as it might create impediment while applying for refinancing mortgage. Your credit report can be tainted for 10 years. But with the end of the petition the negative impact on your credit report will be diminished with the passage of time.

After bankruptcy you can take out a secured credit card and make regular monthly payments to improve your credit report. You should avoid closing your old accounts; instead reduce the use of these accounts. The credit limit on your credit card should not be used more that 30% if you are planning to repair your credit score.

Remove the incorrect entries on your credit report before refinancing your mortgage:

Your credit report might get blemished due to wrong entries in it, therefore; your task primary is to contact the credit bureau to remove the errors. According to the Fair and Accurate Credit Transactions Act, you can get a free copy of the credit report from Experian, Equifax and TransUnion. You can also rely on AnnualCreditReport.com for a free credit report according to the suggestion of FTC.

These are the few tactics that you can employ to make an effortless move to refinance mortgage.

Anya Bennett