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Chapter 13 Bankruptcy Dismissal
Live in Missouri and if my bankruptcy is dismissed how long do I have to wait to get a cash out refinance?
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1 Reply
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In Missouri, debts persist when the case has been dismissed, which means your credit is still off. If you find yourself in a position and have been dismissed due to bankruptcy, below are a few things you need to take note of regarding cash-out refinancing:
Waiting Periods
Conventional Loans: As a new policy, lenders may need to wait 4 years after a bankruptcy case has been dismissed to apply for a cash-out refinance loan. The waiting time tends to differ depending on the lender.
FHA Loans: If you want an FHA loan, you must wait approximately three years after the case closes.
VA Loans: On the other hand, the waiting period for VA loans is almost the same as that of FHA loans, i.e., around three years or even 2 years after the case of dismissal.
Influencing Factors
Credit Score: It’s better to ensure that the credit score increases from the time of the bankruptcy’s dismissal to the refinancing, as a score of 620 or higher is recommended.
Ratio of Debt to Income: Most loans require a DTI ratio of less than 43%, and the lender will determine the borrower’s DTI ratio.
Equity: Usually, 20% equity is leveled on a CEF, and such cash-out refinance forms require a certain percentage of equity in the borrower’s home.
Next Steps to Follow
Check Your Credit: It’s critical to comprehend your standing and resolve any issues that may have occurred since your bankruptcy filing. Hence, take time to review your credit report.
Consult Lenders: Different lenders may have different requirements and waiting periods post dismissal of bankruptcy, hence you should take their input regarding such specifics.
Gather Documentation: It is imperative to consolidate your papers, for example, income proof, evidence of assets and credit history, and even the present worth of your house.
While conventional cash-out refinances require waiting for bankruptcy to be resolved, FHA and VA loan refugees must wait three and two years after the bankruptcy is dismissed. Mending your credit situation and showcasing a stable financial environment can positively affect your approval prospects. If you have more questions or need help, let us know!