Refinancing your mortgage after a bankruptcy can help you reestablish credit. Because the new mortgage is secured by your home you should qualify for better interest rates. There are steps you can take to improve your credit prior to applying; here are tips to help you qualify for the best mortgage after bankruptcy.
Clean Up Your Credit Reports
Before you think about refinancing your mortgage you need to ensure your credit reports are accurate. When a bankruptcy is discharged there are a number of mistakes that end up in your records regarding credit accounts. It is important to have all these errors cleared up prior to applying for a new mortgage. If you find errors in your credit records you need to dispute them with the individual credit agencies.
Improve Your Loan Application
The longer you wait after a bankruptcy, the less significant it becomes. Ideally you will want to wait two years in order to qualify for traditional mortgage rates. If you cannot wait two years, waiting six months will allow you to qualify for better mortgage interest rates.
You can do other things to qualify for better rates. Make all of your payments on time and maintain a low debt-to-income ratio. Your new mortgage lender will scrutinize your repayment history when evaluating how much of a risk you are.
Do Your Homework
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. To learn more about finding the best mortgage when refinancing, register for a free mortgage guidebook.