Refinance After Bankruptcy Mortgage Lending Guidelines

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This BLOG On Refinance After Bankruptcy Mortgage Lending Guidelines Was PUBLISHED On April 8th, 2019

Many homeowners who file bankruptcy often want to keep their homes and reaffirm their mortgage.

  • By reaffirming the mortgage, it means that the bankruptcy petitioner is willing to keep their home and keep their mortgage payment current
  • Going forward, reaffirmed mortgages needs to be paid timely
  • Bottom line is that bankruptcy petitioners are asking the U.S. Bankruptcy Courts for permission in excluding their home loan outside bankruptcy
  • If the Bankruptcy Trustee is convinced the petitioner is able to afford their mortgage payments, then the reaffirmation of the mortgage gets confirmed
  • Homeowners can refinance after bankruptcy
  • They can refinance after bankruptcy with rate and term loans to lower their payments
  • Or if they have equity in their homes, they can refinance after bankruptcy and do a cash-out refinance

In this blog, we will discuss qualifying for a mortgage after bankruptcy and the waiting period requirements.

Lowering Monthly Payments By Refinance After Bankruptcy

After consumers get their bankruptcy discharged, they have a fresh start in life.

  • Most never want to see credit again
  • However, many folks with a home mortgage often want to know if they can lower their mortgage payments by refinance after bankruptcy
  • With mortgage rates being at a 24 month low, many homeowners with VA and/or FHA Loans can take advantage of VA and/or FHA Streamline Refinance Loans
  • VA and FHA offers a fast-track streamline refinance loan program with limited documentation
  • There is no appraisal required, no income documentation, and borrowers can close in 21 days or less
  • Rate and term refinance are only allowed with streamlines
  • Credit scores determine mortgage rates
  • The higher the credit score, the lower the mortgage rates
  • There is no waiting period after bankruptcy to qualify for VA and/or FHA Streamline Refinance

Cash-out is not allowed on streamline refinances.

Waiting Period Requirements To Refinance After Bankruptcy

To do a full credit qualified refinance after bankruptcy, there are mandatory waiting period requirements. Here is the waiting period to refinance after bankruptcy:

  • FHA Loans require a two year waiting period after Chapter 7 Bankruptcy discharge date
  • VA requires a two-year waiting period after Chapter 7 Bankruptcy discharge date
  • USDA Loans require a three-year waiting period
  • Fannie Mae and Freddie Mac require a four year waiting period to refinance after bankruptcy discharge date
  • NON-QM Loans has no waiting period requirements
  • VA and FHA allows borrowers to refinance during a Chapter 13 Bankruptcy repayment plan with Trustee Approval but needs to be a manual underwrite
  • There is no waiting period after a Chapter 13 Bankruptcy discharge date on VA and FHA Loans
  • Any VA and/or FHA Loans with less than 2 years or less after Chapter 13 Bankruptcy discharge date seasoning, it needs to be a manual underwrite

Cash-Out Refinance Mortgage Guidelines

The following are loan to value requirements when it comes to cash-out refinance mortgage:

  • FHA allows up to an 85% Loan To Value on cash-out refinance
  • VA allows up to 100% Loan To Value on cash-out refinance
  • Fannie Mae and Freddie Mac allows up to an 80% cash-out refinance mortgage on conventional loans

Qualifying For Mortgage With Direct Lender With No Overlays 

Borrowers who need to qualify for a mortgage with a direct lender with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or eamil us at gcho@loancabin.com. The Gustan Cho Team is available 7 days a week, evenings, weekends, and holidays.

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