Buying A Home Refinancing

How to Refinance an FHA Loan After Bankruptcy

Written by Rebecca Lake

Sometimes filing bankruptcy is a necessary step to keep from losing your home. For example, a Chapter 13 filing allows you to get caught up on past due mortgage payments without having to face foreclosure. Chapter 7 lets you wipe out unsecured debts, freeing up cash flow so there’s less financial pressure to keep up with your loan payments.

Once you come out of bankruptcy, you’ll have to begin the hard work of repairing the damage to your credit. This is crucial, particularly if you plan on refinancing your mortgage at some point to try lower your interest rate or reduce your payments. If you’ve got an FHA loan, there are a few things you need to keep in mind if refinancing is your long-term goal.

You Won’t Be Able to Refinance Right Away

The Federal Housing Administration imposes a mandatory waiting period before you can refinance after bankruptcy. If you filed a Chapter 7 case, you’ll have to wait two years from the date of the initial discharge to apply. With a Chapter 13 case, the waiting period is satisfied after one year but you have to be staying on track with your repayment agreement.

If you have a high balance FHA loan, you’ll be waiting a little longer. Generally, you’re considered to have a high balance loan if you borrow more than $417,000. If you filed bankruptcy with this kind of loan, you’ll have to wait seven years before refinancing is an option.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website, RebeccaLake.net.

1 Comment

  • I file chapter 13 and it was discharge in Mar.28,2013 and now I would like to get a mortgage and the banks are saying that I have to wait until it is 4 years before I can get another mortgage. Is there any chance I could get another mortgage now because my lease will be up in Sept. and we would like to get a mortgage now to move by the time are lease is up. Or do I have to wait until it is up?

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