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.
The mortgage industry is extremely competitive; this means there are opportunities available to you that did not exist ten years ago. Having a recent bankruptcy no longer prevents you from refinancing your mortgage; however, the amount you pay depends on how savvy a shopper you are. Online search makes it easy to compare loan offers from a variety of different lenders.
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.
Because you can expect to pay a higher interest rate when mortgage refinancing after bankruptcy, it is important to avoid paying any retail markup of this loan. Mortgage companies routinely markup the interest rate you qualify to boost their revenues. This markup by the retail mortgage company is called Yield Spread Premium and results in paying thousands of dollars in unnecessary interest each year.
You will need to spend some time learning about mortgages and researching mortgage lenders. This will allow you to avoid making many of the costly mistakes homeowners make when refinancing their mortgages. Shop from a variety of mortgage lenders and compare interest rates, lender fees and closing costs; by making this comparison from a variety of mortgage lenders you will be able to spot lenders that are trying to take advantage of borrowers with their terms, conditions, and fees.
