In some cases, we become too complacent about getting loans and other debts because of our income streams that seem to be stable.
However, when financial crises strike, we are left with unpaid and accumulating debts. Stress worsens when banks and other lenders start calling from time to time to follow up and check on late payments.
There are many ways to pay our debts when situations like this happen, such as debt consolidation plans where all your loans are consolidated into one single debt, so you will only have one liability to pay for every month.
There are a lot more options to help you pay your debts. However, if you think any of those options are still too difficult for you to pay off your loans because of lack of income, then you may need to file for bankruptcy.
When people hear about bankruptcy, they usually associate it with as the end of the world, at least as for as their finances are concerned, and that there is no more chance of getting back to financial independence.
In fact, filing bankruptcy saves you from an ocean of debt and provides you with a restart on your finances.
Here’s what you need to know about filing for bankruptcy and refinancing, even after a bankruptcy.
Filing for bankruptcy is the last resort for people who can no longer afford to pay their bills, debts, and other financial obligations.
Filing for bankruptcy usually happens when a person has suddenly experienced a recession in his/her finances. Particularly if when financial times were good, a family may have bought items on credit in addition to normal living expenses, and then had unexpected losses of income. One common example is when the business ventures of an entrepreneur have fallen apart and there are no more ways to revive them.
In this case, the person may be left with loans and other debts that can no longer be paid due to the loss of income stream.
Because of the very hard financial situation the person is faced with, the best way for the individual to deal with and solve his/her financial problems is by the option to file for bankruptcy.
Filing for bankruptcy is a tough decision, one of the toughest an individual can make. While the financial debts and other obligations may be waived, it will leave a person with a poor credit history, which means that if you file for bankruptcy, it would be hard for you to get new loans from banks.
However, there you can find some advantages available after filing a bankruptcy. Kind of like finding the rainbow following a storm.
First, you will have a fresh new start on your financial obligations. You will have no more debt and no more credit history, except for the bankruptcy that you have filed.
Second, it is still possible to refinance even after a bankruptcy.
Yes, you’ve read it right. This is where you can take advantage, for refinancing can still be made possible even if you have a record of bankruptcy in your credit history.
Because it serves as a financial beginning when you have filed for bankruptcy, you can be given lower monthly rates for your loans when approved.
If you plan to get a home purchase loan, even after bankruptcy but are hesitant about it, here’s what you need to know when refinancing a home mortgage and why it is recommended that you refinance your home after a bankruptcy:
When you have an existing mortgage loan with an interest rate of 6% or even higher, you can have a new fixed interest rate on your new loan which can be lower than your existing loans. This gives you more advantages as you won’t be burdened with higher interests when paying for your new mortgage loan. Make sure to apply for a refinancing when interest rates drop to enjoy the benefits of your new loan.
When you get a home purchase loan after a bankruptcy, you are privileged to pay at lower monthly rates. For example, a $100,000 home mortgage refinance at Peak Home Loans can be paid at $435.00 per month with an interest rate of 3.25%.
You may do this by increasing the payment term of your new home mortgage refinancing loan. Suppose you currently have a 10-year mortgage at a fixed rate interest, you can refinance into a new mortgage loan with a 25-year term to get lower monthly payments.
Let us say this time you want to pay off your fixed loan over a shorter time period. If five years ago you got a 25-year fixed rate mortgage, that means that you will have 20 years more to pay it off. However, when you have filed for bankruptcy, you can refinance a new home purchase loan with a payment term of 15 years. With this said, you can pay off your debt faster by reducing the payment term for fewer years.
In many cases, you pay higher costs because of Private Mortgage Insurance or PMI. Check the mortgage statement of your current loan to see if there is a charge for a mortgage insurance. You may also log in online, if you have access, and see the mortgage details. If you don’t have access to any of these, call your bank’s customer service department and ask the representative about your mortgage details. If you find out your loan balance has mortgage insurance with it, you may request to get rid of the insurance payments. The PMI can eat up to 80% of your current home mortgage loan, so taking it off drastically reduces the amount you will have to pay for your new home refinancing loan.
Removing the co-signer has always been common when it comes to refinancing. Some refinance their loans just to remove the co-signer on the contract. By removing the co-signer, you help relieve them from other financial liabilities they may encounter because of your own loans.
If you plan to keep your home for a long period of time, paying on time your monthly rates gives you more privileges in the long run. One of these is that you may soon get the privilege to borrow money against the property equity and use it for home improvements. While you can use the cash out intended for other purposes like a vacation or a small business, spending it for home improvements would be better than purchasing a new home.
Given these advantages after bankruptcy, you now have the chance to make wiser decisions when it comes to loans and refinancing.
Take advantage of the low-cost refinancing on home mortgages after bankruptcy, for then you can receive them at lower costs.
These privileges give you less worries about paying for your home purchase loans by applying for a refinancing loan when interest rates drop, by paying at lower monthly rates, and/or paying for a shorter time period, depending on what is more convenient or important to you.
Once you have re-established your finances again, a home mortgage can then be easier to pay off.
Peak Home Loans provides expert advice on getting home loans and mortgage refinancing to their clients. They also help their clients in getting hassle-free and low-cost loans that can easily be approved, even to those that have a record of bankruptcy in their credit history.
If you don’t know where to go and how to apply for a home mortgage refinance loan, go to Peak Home Loans and you will be given assistance in order to make your transactions easier and hassle-free.
Filing bankruptcy isn’t the end of the world for your finances. Instead, saves you from the stresses of your debts and lenders. Ideally, it allows you a chance to start over, at least from a financial perspective.
Though you may have some work to do after filing for bankruptcy, and you’ll need to rebuild your credit score rating, the effects of bankruptcy aren’t always permanent.
Always remember that by having no more debt and credit history, it is your chance to decide more wisely on your finances and bank loans.
Having to start from the beginning, you can avoid impulsive loans you have made before, and start applying for those that provide you with the best loan deals, interests, and payment terms. With this, you get win-win deals with terms that make your payments less stressful compared to your previous debts.
Contact Peak Home Loans and let them take all your worries away and don’t be afraid to start from the very beginning. In no time, you can take the privileges of refinancing for home mortgage and other loans.