It is common for people to need to refinance their mortgages at some point in their lives, either to try to negotiate better rates or to access the equity in their property. Mortgage refinancing after bankruptcy is possible, but may not be that beneficial to you as low interest rates are based on credit scores and yours will have been severely affected by declaring bankruptcy.
You can try to refinance your mortgage whenever you like, however, if you have filed under Chapter 13 of the U.S. Bankruptcy Code and are still in the repayment phase, you will have to get the approval of the court-appointed trustee. This will only be granted if you are making your regular payments and have not taken on any other debts.
When you are refinancing your mortgage, lenders will calculate the loan to value ration of your home by looking at the market value of your home and deducting what you still owe. In addition, they will look at your credit history and credit score to see whether you will be a good investment risk. As such, it is always best to wait a couple of years after your bankruptcy has been finalized in order to raise your credit before trying to refinance your mortgage.
If you are only refinancing to get a better interest rate, rather than trying to cash in the equity of your home, lenders will be more likely to deal with you regardless of your bankruptcy. This is because refinancing what you owe, not the total amount will be safer for the lender, even in the event that you do not pay. On the other hand, if you don’t have a lot of equity and they think you may default, you will definitely not qualify for a good interest rate.
Mortgage refinancing after bankruptcy is best done if you have already managed to raise your credit score, or if you are not asking to access the equity of your home. If you shop around for mortgage lenders that are willing to deal with bankrupt clients, you should be able to find a refinancing option to meet your needs.