Real Estate

Bankruptcy Mortgage Refinancing

Story Published on July 15, 2008 ⋅  Email this Story ⋅  Print this Story ⋅ Post a comment ⋅

If you are considering mortgage refinancing with a recent bankruptcy on your record, qualifying for a good interest rate is essential for your new loan. Finding a good deal when mortgage refinancing can be difficult, especially if you have not built up your credit. Here are three tips to help you qualify for the best rate when mortgage refinancing with your financial situation.

Refinancing your mortgage has many advantages: lower interest rates, lower monthly payments, cashing out equity, and rebuilding your credit, just to name a few. Because you have a bankruptcy on your record refinancing your mortgage will be more difficult, but not out of your reach. There are steps you need to take before you apply for a new mortgage; this will ensure you qualify for a decent interest rate and favorable terms on the new mortgage loan.

Watch out for “Computerized Origination Fees,” as many sites like Lending Tree charge ridiculous fees for filling out a form on their site. Lending Tree is notorious for this and will charge you as much as $1300 while claiming there is no fee to you for their service. The bottom line with online mortgage refinancing is to carefully comparison shop and read all the fine print before you decide on a loan.

Because you can expect to pay a higher interest rate when mortgage refinancing after bankruptcy, it is important to avoid paying any retail markup of this loan. Mortgage companies routinely markup the interest rate you qualify to boost their revenues. This markup by the retail mortgage company is called Yield Spread Premium and results in paying thousands of dollars in unnecessary interest each year.

You will need to spend some time learning about mortgages and researching mortgage lenders. This will allow you to avoid making many of the costly mistakes homeowners make when refinancing their mortgages. Shop from a variety of mortgage lenders and compare interest rates, lender fees and closing costs; by making this comparison from a variety of mortgage lenders you will be able to spot lenders that are trying to take advantage of borrowers with their terms, conditions, and fees.

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