FHA refinancing is obtainable even if you are presently in bankruptcy. Bad credit scores can be overcome if the lender can document the borrower's ability and willingness to make the new FHA mortgage payments on time.
Now you only need 1 year after a bankruptcy to get a FHA mortgage refinance. Did you know that HUD enable borrowers the ability to buyout their Chapter 13 Bankruptcy if they can document a timely payment period for the BK? The other FHA refinance requirement is that the borrower has had the Chapter 13 bankruptcy for at least 1 year. Refinance with bad credit now while the programs are still available. FHA is a smart choice for refinancing because they allow borrowers in a BK to be rewarded with a lower fixed rate mortgage by simply showing our mortgage lenders that you have made the bankruptcy payments on time in the last twelve months. FHA ensures homeowners the ability to refinance a Chapter 13 bankruptcy by offering fixed rate solutions that produce better results that include lower housing payments.
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In addition to helping bad credit borrowers reestablish their credit quicker. Today's FHA mortgage rates are very competitive interest rate that are typically 4-6% lower than the available subprime mortgages in the current financing market. Maintaining a good payment history for your bankruptcy or mortgage is a must for FHA refinancing eligibility.
Homeowners in a Bankruptcy may still be eligible for a fixed rate refinance that saves them money!
The FHA recommends rebuilding your credit after a bankruptcy with new trade lines like a car, credit card or a fixed rate mortgage. If you have had a Chapter 7, or 11 bankruptcy discharged, then you will need to show new credit with good payment histories 2 years after the discharge date.
Regular payments are made to a court-appointed trustee over a two to three year period or, in some cases, up to five years, to pay off scaled down or entire debts. If the borrower has finished making all payments satisfactorily, the mortgage lender may deem that they have reestablished with sufficient credit.
FHA Mortgage Rates
FHA Secure Refinance
Typically refinance loans for bankruptcy participants are penalized with higher mortgage rates due to the inherent risk of the borrower's bad credit in the past. However FHA loans may offer competitive interest rates if the reason for bankruptcy is viewed as beyond the borrower's ability to prevent. The refinance rates for FHA bankruptcy loans are fixed with no pre-payment penalties. In most cases, first time home buyers with bad credit choose FHA over subprime because the interest rates are low and their lending guidelines are aggressive.
In lieu of dropping home values and rising ARM's, many homeowners may qualify for the FHA Secure that allows for straight rate and term refinancing. This program was placed on hold, but Obama promised that FHA would be included in the 2nd version of the Home Affordable Act. Too many homeowners have been unable refinance because their loan balance is higher than their appraised value that traditional lenders want to see.