-
REFINANCE AFTER BANKRUPTCY
I would like to refinance my mortgage. My credit score is currently approximately 695-715. I have a Chapter 11 that was discharged in June 2020. I would like to refinance by adding a co-borrower with a credit score of 780-800. My current home value is approximately $420,000, and my current principal balance is $218,000. I would like to take $100,000 from equity. Can you help us?
-
1 Reply
-
Of course! If you have a co-borrower, you can refinance your mortgage to improve your loan terms based on your credit scores and equity situation. Here’s a summary of the major points and actions that you can follow:
Key Considerations
Credit Scores:
Your credit score (695-715) is generally considered good, while your co-borrower’s score (780-800) is excellent. Most lenders will prefer the lowest score out of the two on rates and terms of loans. In this case, the co-borrower’s credit is strong enough to help you get the desired terms.
Home Equity:
Current Home Value: $420,000
Current Principal Balance: $218,000
Equity Available: Your equity is about $202,000 ($420,000 minus $218,000).
Loan Amount Desired: You wish to extract $100k in equity, owing $318,000 in loan ($218,000 Information on the New Loan Amount plus $100,000 on the New Loan Amount).
Loan-to-Value (LTV) Ratio:
New LTV Calculations:
New Loan Amount: $318,000
LTV = New Loan Amount/Housing Value = 318000/420,000, which equals a new LTV ratio of approximately 75.7%.
Generally, however, the LTV ratio does not raise concerns among lenders regarding amortization. Depending on the type of loan and the borrower’s qualifications, many lenders set it at 80% or more.
The ratio of debt to income (DTI). Please explain this in detail: Lenders will look at your DTI ratio, computed by dividing your total monthly debt obligations by your total monthly income. Aim for a DTI of lower than 46.9% front-end and 56.9% back-end, although some lenders may accept lower debt-to-income ratios if there are layered risks.
Approval of deduction on obligations and the strike off of Chapter 11 files: Most lenders will validate a minimum post-suspension application of two years on the normal loan. However, this is only sometimes the case.
Consider submitting the following documents: Obtaining Documentation: Obtaining the necessary documentation, as mentioned above, such as DTI metric proof or equity proof via tax returns and returns of such lenders, along with general Information about you, who is the co-borrower, and the two pending tasks together with bank history statements, will procure you unquestioned support.
Please seek advice from other lending institutions or lenders: Try to talk to many other institutions or lenders and tell them about your intent to refinance your loans.
Additionally, see if those types of help are available rs that have when chapter toabouter categories assist, such as loan types that include. Use your concern of income to the clearest category that can help you.
Single buy option: Put yourself alongside two lenders to seek pre-approval. This largely explains the pending amount and the interests and conditions. The instant you start sustaining the operation, be attentive to the closing fees that will impact the amount of time you spend on offering the completion task.
Sad to say, but closing costs are there to stay:
Remember, refinancing generally comes with a closing cost ranging from 2% to 5% percent of the loan amount. Be sure to include these costs when deciding to refinance.
Stability In Your Rate:
After finding a good loan offer, discuss locking your interest rate to avoid any fluctuations during closing.
Wrapping Up
You are also well qualified to refinance, considering your equity and the credit score of your co-borrower. Doing this will give you a good chance of going through the refinancing procedure as per the requirements and finding financial structures within your reach.
Remember to thoroughly review every offer and see how the new loan would affect the financing, installments, and future expenses.