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Refinance After Bankruptcy Mortgage Lending Guidelines

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Refinance After Bankruptcy Mortgage Lending Guidelines

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 refinance 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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