Getting back to normal after filing bankruptcy can't come fast enough, especially when you own a home. Two years ago I began working with bankruptcy clients who wanted to take advantage of lower interest rates. I spent months working with banks and new wholesale lenders trying to find the best deals possible. I invested countless hours helping clients scrub their credit reports in hopes of raising their scores. With a little patience and allot of elbow grease I have been successful in helping clients ravaged by bankruptcy get a fresh start. I have found there are three main ingredients necessary for a client to get refinanced.

Good Pay History

The first ingredient is a good pay history since the discharge. Lenders look very closely at credit history following a bankruptcy discharge. If they see late pays on your current mortgage they will penalize you for it and in some case decline the refinance loan.

Scrubbing Your Credit Report

The second ingredient is clearing your credit report of collections that where included in the bankruptcy. Most creditors are very slow about updating records so it is important to order an updated credit report and dispute improperly reported records. I have found by disputing these inaccuracies can raise a borrowers score by as much as 25-75 points in a 45-day period.

Low LTV

The third ingredient is "loan to value" or LTV. LTV is calculated by subtracting your current balance from the current market value of your house. The lower the LTV the better the interest rate. LTV is also used to determine how much cash a borrower can get in a cash-out loan. Most clients use the cash-out loan to payoff over due property taxes, tax liens, or for home improvements.

Keep in mind; you have the ability to make your situation better it just takes a little investment in time and energy to make it happen. Bankruptcy doesn't mean the end of the world; it is an opportunity to do it right the second time. I work with clients all over the country and have learned that refinancing after bankruptcy can be done and it doesn't mean you have to settle with outrageously high interest rates either. The same ingredients apply for those seeking to refinance while in Chapter 13 bankruptcy. Unlike a Chapter 7, lenders don't require the Chapter 13 borrower to be discharged to take advantage of a refinance. They do require borrowers to pay-off what is still owed to the trustee at the closing table. Most borrowers find this a great way to reduce their monthly expense by rolling it into their mortgage payment. This can save borrowers thousands of dollars every month.

If you have questions or need information regarding a credible mortgage specialist in your area feel free to email, ben@southwestmortgage.com.

Ben Ganter specializes in bankruptcy lending with Southwest Mortgage. He has been involved with the banking industry for several years.