Bankruptcy

Different Ways To Refinance After Bankruptcy

There are several possible ways out there that can help you refinance after bankruptcy, but you are strongly recommended not to go for refinancing immediately after you are officially declared as bankrupt. The best strategy is to wait for a couple of months to regain financial foothold before you go for any such thing. Since bankruptcy severely damages your credit score, it is obviously not possible to qualify for a good refinancing deal. It is always better to spend some quality time first to rebuild your credit. This way, you can easily get a better deal. You should approach it through a step-by-step process. Following is a brief rundown on some of the different ways that you can consider in this regard.

Work On To Improve Your Credit

The best way to refinance after bankruptcy is to first wait for at least six months, where you will be working on different strategies to improve your credit worthiness. Though it is very much possible to obtain a refinance loan immediately after bankruptcy, it is just that you will not be able to get the best rates. When you have a better credit after six months, there will be more options available out there for you and you will also be able to qualify for better rates and terms. When the lender sees that you have worked hard for the last six months to improve your credit, it will be a great plus for you and they will not mind offering you a low-rate refinance deal. During these six months, you must be regular with your monthly payments toward your bills and debts. Avoid making defaults or late payments, as it will only further hurt your credit. Once you have some control over your finances and have paid off your current debts (such as the ones that could not be discharged in bankruptcy), you can consider acquiring new credit, such as a secured credit card. The idea is to make full timely payments toward the credit card balances. This way, you will see a significant improvement in your credit score within a matter of just 3-4 months.

Build A Savings Account

In order to be able to refinance after bankruptcy with a low-rate deal, you must also work on to build your savings. Create a strict budget plan and follow it religiously. If you cannot earn more, you can always manage a decent amount of extra cash by spending less. Cut down your expenses to as low amount as possible. If you are strongly determined to regain control of your finances, you can even consider living a frugal life, at least for a temporary period (for a few months). You can further boost your savings by working overtime or by getting a second job. Having money in your savings accounts will make you an eligible candidate for a great deal in refinancing.

Find A Reputable Sub-Prime Lender

You have to be very practical in your approach. The conventional lenders may still not entertain refinancing applications from you just because of bankruptcy. Therefore, if you want to refinance after bankruptcy, you are advised to look online for sub-prime lenders, especially the ones that specialize in refinancing programs to those with low or bad credit. Do a thorough research online. Before signing up with a particular lender, you must read the fine prints thoroughly. Make sure that there are no hidden clauses in the refinance agreement and that you very well understand the terms and conditions of the program.

Do A Thorough Comparison Shopping

The market out there is very competitive. You may be tempted to accept the first offer that comes your way to refinance after bankruptcy. You are recommended to have some patience. Compare the different offers and then make an informed decision on which program is the most suitable and affordable for you.

Cashing Out Equity

When you refinance a property, you might be considering cashing out some of the equity in your property. However, there are a couple of things that you need to keep in mind in this regard. For example, if you keep the equity intact, it will help you rebuild your credit faster. But, if you really need some cash, you may still like to go for it.

When you refinance after bankruptcy, you must make up your mind that you are going to refinance the property again after a few years when your credit is back in the top range. However, for this, you must be consistent in your efforts to build your credit worthiness.


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