Getting a new mortgage after bankruptcy

If a Florida homeowner has filed for bankruptcy, it may be possible to refinance an existing mortgage or obtain a new one after the case has been resolved. Those who wish to obtain a new loan from either Fannie Mae or Freddie Mac will have to wait two years after the dismissal date if the bankruptcy was because of an unexpected illness or job loss. However, the wait is four years if financial mismanagement caused the bankruptcy.

Another option may be to refinance a mortgage through the FHA after a one-year waiting period. Borrowers must also be able to document the reason for their financial hardship and complete housing counseling prior to applying. Individuals applying for the loan must also be able to meet regular FHA loan requirements. In some cases, it may be possible to refinance a mortgage while the bankruptcy case is underway.

However, a debtor would first need to ask the court for permission to incur new debt. Although debtors are merely replacing one loan with another, there is new paperwork to fill out and a new lender may enter the picture. Therefore, the court will generally consider a refinance to be new debt. As with any other loan program, a borrower would then need to meet lender specifications to successfully refinance a mortgage.

Filing for bankruptcy may stop repossessions or make it possible to renegotiate the terms of a mortgage. In some cases, it may be possible to refinance a mortgage before a case formally ends. a lawyer may be able to explain how bankruptcy may be able to help a homeowner reorganize or refinance a mortgage and how long it may take to do so.