Solving financial problems can be stressful and time consuming. If you are trying to take control of your finances after a bankruptcy by refinancing your family home you may have the right idea. Refinancing is a great way to replace an existing debt with a new loan – hopefully with better terms and conditions such as a lower interest rate. Unfortunately, due to the prior bankruptcy you may have some difficulties.
While your credit score has taken a hit and your money reserves may be completely depleted after a bankruptcy, the banks may still be willing to work with you. As long as the market value of your house hasn’t declined substantially since you bought it and there is a significant amount of equity, it’s still a well secured investment for your mortgage holder. Few lenders really want to force a sale or foreclosure so they are willing to work with the owners as long as they can document ways to show they have been financially responsible. Here is a list of documentation and steps that homeowners can take to verify income and substantiate job security.
- Letter from employer(s) attesting to your excellent performance and job security.
- Bankruptcy paperwork that can verify that which debts you’ve discharged, or other documents that can verify that you have no other long-term debts.
- Show payment stubs or paperwork to prove that you have been paying mortgage monthly.
- Seek a realtors opinion of the fair market value of your residence.
- Try build up cash reserves. This may be very difficult after a bankruptcy but take steps to slowly build up your savings. This may mean a second job, selling of possessions or asking for a raise at work.
- Prove credit and financial counseling. A note or certificate from a course can go a long way in proving that you are taking control of your finances.
Filing for bankruptcy can wipe out your unsecured debt. This means you are making a fresh start in the financial arena. Your bank may be able to further help you take control over your finances and get you a loan that has better terms and conditions. Consult your qualified bankruptcy attorney to find out where you stand financially in regards to refinancing your home loan. Post-discharge debtors can obtain new financing or refinance an existing mortgage. You will not, typically, get the best rate the financial institution offers, but it will be a new mortgage for credit purposes.