{"id":331788,"date":"2024-11-14T09:44:47","date_gmt":"2024-11-14T14:44:47","guid":{"rendered":"https:\/\/www.houzeo.com\/blog\/?p=331788"},"modified":"2025-02-03T22:59:09","modified_gmt":"2025-02-04T03:59:09","slug":"refinance-after-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.houzeo.com\/blog\/refinance-after-bankruptcy\/","title":{"rendered":"How to Refinance After Bankruptcy in 2024"},"content":{"rendered":"\n<p>There was an <a href=\"https:\/\/www.debt.org\/bankruptcy\/statistics\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">18%<\/a> increase in bankruptcy filings in the past year. But bankruptcy doesn&#8217;t stop you from getting a refinance. However, refinance after bankruptcy can be difficult due to the long waiting time.<\/p>\n\n\n\n<p>Between 2013 and 2023, the median loan amount for cash-out refinance was <a href=\"https:\/\/www.consumerfinance.gov\/about-us\/blog\/office-of-research-blog-a-look-at-cash-out-refinance-mortgages-and-their-borrowers-between-2013-to-2023\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">$198,000<\/a>, and for non-cash-out refinance, it was $241,700. Moreover, between 2013 and 2019, the quarterly average originations of cash-out refinance were 240,000.<\/p>\n\n\n\n<div class=\"block-takeaways\" style=\"margin-top:20px !important\"><p class=\"topHead\"><\/p><p class=\"headKeytake\">\ud83d\udcc9<b> Refinance after bankruptcy \n<\/b><\/p>\n<ul>\n<li>A Chapter 7 bankruptcy discharges within 6 months, as it requires selling off your assets.\n<\/li>\n<li>Between 2013 and 2019, the median debt-to-income ratio needed for a cash-out refinance and non-cash-out refinance was <a href=\"https:\/\/www.consumerfinance.gov\/about-us\/blog\/office-of-research-blog-a-look-at-cash-out-refinance-mortgages-and-their-borrowers-between-2013-to-2023\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">36<\/a> and 34, respectively. \n<\/li>\n<li>A Chapter 13 bankruptcy allows you to protect your assets by restructuring your debts. It spreads your payments across 3\u20135 years.\n<\/li><\/ul> \n<\/div>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"bankruptcy-refi\"><strong>Can You Refinance Your Mortgage After Bankruptcy?<\/strong><\/h2>\n\n\n\n<p>Yes, you can <a href=\"https:\/\/www.houzeo.com\/blog\/how-does-refinancing-work\/\" target=\"_blank\" rel=\"noreferrer noopener\">refinance<\/a> a house after bankruptcy. However, you may have to wait a few years to rebuild your credit score before applying for a mortgage. Different types of bankruptcies affect your credit score differently.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"Chapter-7-vs-Chapter-13-Bankruptcy-\"><strong>Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy <\/strong><\/h2>\n\n\n\n<p>Refinance procedures vary depending upon the type of bankruptcy. The most common types of bankruptcies are chapter 7 and chapter 13.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\" id=\"can-i-refinance-my-mortgage-after-chapter-7\"><strong>What Is a Chapter 7 Bankruptcy? <\/strong><\/h3>\n\n\n\n<p>Chapter 7 bankruptcy, or traditional bankruptcy, discharges you from your debt. Here, the lender liquidates your assets to recover the payable amount. However, assets like residential property, personal vehicles, and other personal belongings, are exempt.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\" id=\"buying-a-house-after-chapter-13-discharge\"><strong>What Is a Chapter 13 Bankruptcy? <\/strong><\/h3>\n\n\n\n<p>On the other hand, a Chapter 13 bankruptcy restructures your debt and allows you to repay the creditors without liquidating your assets. It allows you to spread your debt payments over 3\u20135 years.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"An-overview\"><strong>Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy: An Overview <\/strong><\/h2>\n\n\n\n<p>Let us look at an overview and the waiting time for refinancing a mortgage after Chapter 13 and Chapter 7 discharge.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Chapter 7<\/strong><\/td><td><strong>Chapter 13<\/strong><\/td><\/tr><tr><td>You may be required to liquidate your assets to repay your debt.<\/td><td>Your debt is restructured and repaid.<\/td><\/tr><tr><td>Your debt is discharged within 6 months.<\/td><td>It can take 3-5 years to repay the debt.<\/td><\/tr><tr><td>It reflects on your credit report for 10 years.<\/td><td>It reflects on your credit report for 7 years.<\/td><\/tr><tr><td>How long after Chapter 7 can you refinance your home?<br><br>1. Conventional loans: 4 years<br>2. FHA loans: 2 years<br>3. VA loans: 2 years<br>4. Jumbo loans: 7 years<\/td><td>After how long can you refinance after Chapter 13 bankruptcy?<br><br>1. Conventional loans: Discharged for 2 years (filing should be 4 years old) and dismissed for 4 years.<br>2. FHA loans: No waiting time<br>3. VA loans: No waiting time<br>4. Jumbo loans: 7 years<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"benefits\"><strong>What Are the Benefits of Refinancing After Bankruptcy? <\/strong><\/h2>\n\n\n\n<p>Refinancing a house after bankruptcy has several benefits, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Low monthly<\/strong> <b>payments:<\/b> Refinancing your loan for a shorter term with a lower <a href=\"https:\/\/www.houzeo.com\/blog\/mortgage-interest-rates-forecast\/#What-are-Mortgage-Interest-Rates?\" target=\"_blank\" rel=\"noreferrer noopener\">interest rate<\/a> can significantly reduce your monthly mortgage payments.<\/li><li><strong>Extra cash reserves:<\/strong> You can opt for a<a href=\"https:\/\/www.houzeo.com\/blog\/cash-out-refinance\/\" target=\"_blank\" rel=\"noreferrer noopener\"> cash-out refinance<\/a> after Chapter 7 and Chapter 13 bankruptcy. This will allow you to use your home&#8217;s equity to rebuild your credit score and pay off debt faster.<\/li><li><strong>Lower mortgage rates:<\/strong> You can refinance your mortgage at lower interest rates; this way, you&#8217;ll pay less interest by the end of your term.<\/li><\/ul>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"How-To-Refinance-After-Bankruptcy-\"><strong>How to Refinance After Bankruptcy? <\/strong><\/h2>\n\n\n\n<p>There are a few steps through which you can refinance a home after bankruptcy, which are:<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Step 1: Applying for a Refinance<\/strong><\/h3>\n\n\n\n<p>If you opt for government loans like <a href=\"https:\/\/www.houzeo.com\/blog\/fha-loans\/\" target=\"_blank\" rel=\"noreferrer noopener\">FHA<\/a>, VA, USDA, etc., you might have a better chance of qualifying. In some cases, even if your credit score is around 500, you may get financing, depending on your <a href=\"https:\/\/www.houzeo.com\/blog\/loan-to-value-ratio\/\" target=\"_blank\" rel=\"noreferrer noopener\">loan-to-value ratio<\/a>.<\/p>\n\n\n\n<p>Once you finalize the lender, they may ask you for the following documents:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The last two pay stubs<\/li><li>Two recent W-2s<\/li><li>Two recent bank statements<\/li><\/ul>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Step 2: Lock-in Your Interest Rate<\/strong><\/h3>\n\n\n\n<p>It is advisable to lock in your interest rates, which fluctuate frequently. You must inquire if your lender offers a <a href=\"https:\/\/www.houzeo.com\/blog\/mortgage-rate-lock\/\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage rate lock<\/a> or not.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Step 3: Make Sure to Complete Underwriting<\/strong><\/h3>\n\n\n\n<p>Once you submit all the documents, your lender <a href=\"https:\/\/www.houzeo.com\/blog\/manual-underwriting\/#underwriting\" target=\"_blank\" rel=\"noreferrer noopener\">underwrites<\/a> your mortgage. Here, the lender verifies your income and whether you qualify for the loan or not.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Step 4: Home Appraisal<\/strong><\/h3>\n\n\n\n<p>The lender will most likely order a <a href=\"https:\/\/www.houzeo.com\/blog\/home-appraisal\/\" target=\"_blank\" rel=\"noreferrer noopener\">home appraisal<\/a> in order to find out the current worth of your house. This is also done to see if the house has lost value since you purchased it.<\/p>\n\n\n\n<h3 class=\"margin-top-15 wp-block-heading\"><strong>Step 5: Close on Your Loan<\/strong><\/h3>\n\n\n\n<p>Once the above formalities are done, the lender will send you a closing disclosure. This document includes all the terms of your loan, including the total closing costs. After going through the document, you can pay the <a href=\"https:\/\/www.houzeo.com\/blog\/how-much-are-closing-costs\/\" target=\"_blank\" rel=\"noreferrer noopener\">closing costs<\/a> and close on your loan.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\"><strong>Bottom Line<\/strong><\/h2>\n\n\n\n<p>Although you can refinance your mortgage after <a href=\"https:\/\/www.houzeo.com\/blog\/can-you-buy-a-house-after-bankruptcy\/\" target=\"_blank\" rel=\"noreferrer noopener\">bankruptcy<\/a>, you must wait a few years as per the type of bankruptcy that you file for. <\/p>\n\n\n\n<p>Chapter 7 bankruptcy wipes your debt sooner by liquidating your assets due to which the wait time is longer. Conversely, Chapter 13 restructures your debt without liquidating your assets which reduces the waiting time.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\"><strong>Find Your New Home With Houzeo<\/strong><\/h2>\n\n\n\n<p>With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of <a href=\"https:\/\/www.houzeo.com\/homes-for-sale\" target=\"_blank\" rel=\"noreferrer noopener\">homes for sale<\/a> on Houzeo.<\/p>\n\n\n\n<p class=\"margin-top-15\"><strong>\u00bb Need More Clarity?&nbsp;<\/strong>Read these exclusive&nbsp;<a href=\"https:\/\/www.realestatequeen.com\/houzeo-reviews\/\" target=\"_blank\" rel=\"noreferrer noopener\">Houzeo reviews<\/a>&nbsp;and learn why the platform is the best in America\u2019s competitive housing market.<\/p>\n\n\n\n<h2 class=\"margin-top-28 wp-block-heading\" id=\"FAQs\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\t\t<div class=\"wp-faq-schema-wrap wp-faq-schema-accordion\">\n\t\t\t\t\t\t<div class=\"wp-faq-schema-items\">\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tCan I refinance my home during Chapter 13?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>Yes, it is possible to refinance your home during <a href=\"#buying-a-house-after-chapter-13-discharge\">Chapter 13<\/a> bankruptcy. However, you may face some difficulties due to strict eligibility requirements.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tCan I get a HELOC after Chapter 7 discharge?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>Yes, you can get a <a href=\"https:\/\/www.houzeo.com\/blog\/home-equity-line-of-credit\/\" target=\"_blank\" rel=\"noreferrer noopener\">HELOC<\/a> after a Chapter 7 discharge. However, you will have to wait for 2 to 7 years before you can apply for it.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<p class=\"ui-accordion-header\">\n\t\t\t\t\t\tWhat is the waiting period for FHA in a Chapter 7 bankruptcy?\t\t\t\t\t\t<span class=\"ui-accordion-header-icon ui-icon ui-icon-triangle-1-s\"><\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\t<div class=\"ui-accordion-content\">\n\t\t\t\t\t\t<p>You must wait for a minimum of 2 years before applying for an FHA loan in the case of <a href=\"#An-overview\">Chapter 7<\/a> bankruptcy.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<div class=\"new-excerpt\"><p class=\"small-desc\">It is possible to refinance after bankruptcy. However, the requirements depend on the type of bankruptcy that you file...<\/p><\/div><div class=\"reading_date\"><span class=\"readtime\">5 mins read<\/span><span class=\"date\">Nov 14, 2024<\/span><\/div>","protected":false},"author":119,"featured_media":426883,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46225,46243],"tags":[31551,31554,31552,31550,31553],"class_list":["post-331788","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buyer","category-mortgage-refinance","tag-fha-refinance-after-chapter-13-discharge","tag-home-equity-loan-after-bankruptcy","tag-home-equity-loan-after-chapter-13-discharge","tag-home-equity-loan-after-chapter-7","tag-how-soon-after-chapter-7-can-i-sell-my-house"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How To Refinance After Bankruptcy in 2024<\/title>\n<meta name=\"description\" content=\"It is possible to refinance after bankruptcy. 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However, the requirements depend on the type of bankruptcy that you file for.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.houzeo.com\/blog\/refinance-after-bankruptcy\/","og_locale":"en_US","og_type":"article","og_title":"How To Refinance After Bankruptcy in 2024","og_description":"It is possible to refinance after bankruptcy. 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