Question by Kimberly: How does refinancing a mortgage work?
Our mortgage is not up for renewal in March but that is when we plan on refinancing our mortgage along with 1 other large debt. Because we will be cleared of bankruptcy in our history in March, we are working hard to better our credit too. What are some of the factors creditors consider when doing a refinancing?
Best answer:
Answer by Landlord
I doubt your credit is high enough. Basically it is the same as when you bought the house, you need the same documents. However, you can only refi to 80% of the appraised value of the property.
Know better? Leave your own answer in the comments!
First thing you need to check your credit reports, I will put the website info at the bottom. When you do a bankruptcy, often the balances on the account and the current status will not be updated and this can bring your score down. If you notice that any accts you included in your bankruptcy are still showing past due or have balances, you will need to dispute with the credit bureaus(fill out a form and provide copy of bkruptcy papers with the list of accts included). This can take up to 30 days which is why you don’t want to wait until you are trying to get a loan. a
Any acct that you included and was discharged with the bankruptcy should have an R7 (better yet, an R1 but the R7 is correct) & a $ 0 balance. Make sure any collections or judgements that were pd off have a $ 0 balance. If you have gotten any new credit since the discharge, make sure it appears and is correct.
Most lenders are going to want a written explanation why you filed bankruptcy and will want to see that you have begun re-establishing your credit.
All of this should impact your credit scores so that the bank will have a correct/updated credit history from the beginning.