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Mark Cappel
UpdatedJul 2, 2007

I have an ARM scheduled for an interest rate reset. What are my chances of finding a mortgage rate refinance if I had a recent bankruptcy?

My bankruptcy was just confirmed this month. I have an ARM where the rate will reset for the first time in February 2008. What are my chances of finding someone to refinance me? Right now my rate is 7.6%.

Many file for bankruptcy protection believe they will not be able to obtain new credit until the bankruptcy filing falls off their credit report, 10 years after their bankruptcy is filed. Some even believe that they will be unable to borrow money for the rest of their lives. Both beliefs are wrong.

Although you may be able to obtain a refinance loan, your low credit score will make finding a loan with a low interest rate much less likely. However, if you want an introduction to pre-screened mortgage lenders, makes it easy to compare mortgage offers and different loan types. Visit the Mortgage Refinance Quote page to find a loan that meets your needs.

While it is true that bankruptcy seriously damages your credit rating, it does not automatically prevent you from obtaining a loan. In fact, some companies, called sub-prime lenders, specialize in lending money to consumers with credit problems, such as bankruptcy. Whether or not you will be able to find a mortgage company willing to extend you the credit you need will primarily depend on your credit score and other factors in your credit history. From my experience, most sub-prime lenders require a minimum credit score in the mid to low 500's, so whether or not your bankruptcy filing will prevent you from obtaining a loan depends on how much the bankruptcy has lowered your credit score. Another major consideration for sub-prime lenders is your payment history on your current mortgage loan. If you have made all of your mortgage payments on time for the past few years, you stand a much better chance of qualifying for a refinance loan. Making your payments on time on your current mortgage is a good indicator that you will repay your new mortgage in a timely manner.

The only way to determine whether you will qualify for a refinance loan is to apply for a loan with several different lenders and/or brokers. Not only will these mortgage professionals be able to tell you whether or not your currently qualify, but if you do not qualify, they can tell you what aspects of your credit history you need to improve before obtaining a loan. If you cannot find a lender willing to extend you credit, you should work on improving your credit score and reapply when your score has improved sufficiently. When you talk to a lender, he or she can explain what steps you must take to qualify, giving you goals to work toward.

If you would like to read more about mortgage refinance loans, I encourage you to visit the Home Refinance Resources page.

If you enter your contact information in the Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the loan options available to you. You should also visit the Credit Solutions page to learn more about credit, credit reporting, and ways to improve your credit score.

I wish you the best of luck in finding a lender willing to work with you. I hope this information helps you Find. Learn & Save.