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Mortgage Loan During and After Chapter 13 Bankruptcy
My brother in law was in a Chapter 13 Bankruptcy and now what to refinance and pull out cash what banks in the Chicagoland area will allow? I work for a real estate developer and property management company and want to help my my brother in law and his wife with getting approved for a mortgage loan.
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1 Reply
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Hola, Maria. Thanks for being active on our forum. Appreciate you. Hope you, Hector, the kids, and all the Familia Munoz are doing great. Refinancing after Chapter 13 bankruptcy is difficult, but it can be done. Here are some steps and some ideas that will enable your brother-in-law and his wife to get a mortgage loan in the Chicago area:
Waiting Period Eligibility Guidelines:
- As per norms, most lenders need 2-4 years from the date of a Chapter 13 discharge before they allow refinancing.
- If the case is still pending, they may have to request permission from the court.
Credit Score:
- They should be advised to obtain and enhance their credit histories where required.
- Increasing their credit scores may lead to better loan terms.
Lenders to Consider
As they seek to understand more about their options, here are some types of lenders that may work with them:
Local Banks and Credit Unions: Smaller institutions will likely have officer discretion, often leading to more favorable lending terms. Try:
- Chase Bank
- BMO Harris Bank
- First Midwest Bank
- Local Credit Unions (like Alliant or DuPage Credit Union)
Mortgage Brokers: They can help your brother-in-law find those who render services to hoard about with privy cases.
Online Lenders: Some online platforms are even quite lenient towards past bankrupt financiers:
- Quicken Loans
- Gustan Cho Associates
- Better.com
- SoFi
Gather Documentation
- Proof of Income: Pay stubs within the recent period or self-recent tax returns.
- Bank Statements: Demonstrate savings and payment histories for the loans in question.
- Debt Payment History: Evidence of timely payment to the Chapter 13 repayment plan documentation.
Seek Help from a Financial Consultant or Lawyer
- They can give appropriate advice on how best to refinance the property according to their case and respect any bankruptcy laws in the process.
Improve Financial Profile
- Advise them on reducing their debts concerning the existing loans and debt avoidance.
- Ensure steady employment and prepare for a larger down payment.
Start the Pre-approval Procedure
- Begin pre-approval with various lenders to average the interest rates and the terms.
- This way, they will be aware of the amount they are borrowing.
Look for a Co-Signer
- They may consider if a family member or a friend has good credit and can act as a co-signer to improve the loan terms.
- Refinancing after Chapter 13 bankruptcy presents opportunities because of its complexities, particularly for flexible lenders.
- Ensure your brother-in-law and his wife do their homework and find all available opportunities.