Bankruptcy and refinancing home mortgage

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Latest post 01-16-2013 1:08 PM by Happy2. 8 replies.
  • 09-26-2012 1:01 PM

    • Happy2
      Consumer
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    Bankruptcy and refinancing home mortgage

    Chapter 7 bankruptcy in October 2006.  Then a refinance of home mortgage balance next month which is seven years later.  Credit Fico scores pulled now are 725-714-734.  Credit report will show bankruptcy and I understand they look at both the FICO score and credit report.  Husband has credit scores of 727-724-734 and his credit report looks better. 

    Is it possible to re-finance?  Home mortgage was reaffirmed and not included in bankruptcy in 2006.  However, the mortgage does not show up on either of the credit reports.  Is there a reason for it now appearing?  Should I contact the mortgage bank and have them add this history to both credit reports?  There has never been a late mortgage payment and it seems this would increase the FICO scores.  Is there a reason this would not be on the credit report?

    Thanks for any info - trying to help

     

     

  • 09-26-2012 1:27 PM In reply to

    Re: Bankruptcy and refinancing home mortgage

    Happy2:
    Chapter 7 bankruptcy in October 2006.  Then a refinance of home mortgage balance next month which is seven years later. 

    You mean Oct 2012? That's only 6 years.

    Happy2:

    Credit Fico scores pulled now are 725-714-734.  Credit report will show bankruptcy and I understand they look at both the FICO score and credit report.  Husband has credit scores of 727-724-734 and his credit report looks better. 

    Is it possible to re-finance?

    Sure.

    You won't get quite as competitive a rate as somebody in the high 700s, but you should do OK.

    Happy2:
    Home mortgage was reaffirmed and not included in bankruptcy in 2006.  However, the mortgage does not show up on either of the credit reports.  Is there a reason for it now appearing?

    No clue.

    Happy2:
    Should I contact the mortgage bank and have them add this history to both credit reports?

    Why not?

    Couldn't hurt to ask. They have no obligaiton to report it. If they say no you won't be any worse off.

    With regard to refinancing have you given serous thought to the reasons you want to refinance and the consequences?

    If you are refinancing the balance to get a lower interest rate and lower payments, that could work. But here's the downside. Figure your closing costs at about 2% of the amount financed. That gets rolled into the new loan (unless you pay cash for the closing costs). And you start a new 30 year period.

    I'll give you an example.

    Let's say you bought your house in January 2000 for 200,000 at 6%. Principle and interest totals 1199 per month. On top of the 200,000 you paid for the house the total interest over the 30 year life of the loan would be 231,676.

    As of today, 141 months later, you would have paid 40,628 in interest and your balance would be 159,372.

    Refinance the balance today and add 2% closing costs to the balance and you refinance 162,559 and maybe you get a 5% rate on a new 30 year mortgage.

    That brings your monthly P and I down to 872.65. The interest you'll pay over the life of the loan is 151,595. Add that to the 40,628 and you get 192,223 as the total cost of the money you borrowed.

    The figures under these circumstances appear favorable if you can get the terms. But the downside is now you have mortgage debt for another 30 years instead of another 18 years.

    You can use the following amortization calculator to put in your own figures and see how it works.

    http://www.bretwhissel.net/cgi-bin/amortize

     

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  • 10-01-2012 8:21 AM In reply to

    • Drew
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    • Joined on 03-30-2000
    • PA
    • Posts 49,517

    Re: Bankruptcy and refinancing home mortgage

    Agree, do the math with care  --you old rate might be 7-8% ?  and possibly new rate might be  4+ %  but watch the "extra's "  --might even need new title insurance  .

    Texas might still exclude home from bankruptcy I don't know but I'd sure check before I did a new deal which might place home at risk.



  • 11-07-2012 8:44 AM In reply to

    • Happy2
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    • Joined on 07-10-2004
    • NC
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    Re: Bankruptcy and refinancing home mortgage

    I just wanted to post an update - I am the OP that posted.

    We are closing on our refinance loan with 3.5%.  Our current interest rate is 5.875%.  We paid extra each month to bring the total balance down.  If we continue with the current amount we pay toward our new loan refinance for 30 years - it will be paid off in eight years.  The upside is that if there is an emergency or the economy changes for the worst we have the lower payment if we need to make the lower payment. 

    We  have not went to closing, and if there are any suprises then I will gladly leave the table without the loan. 

     

    Thank you for your help with this situation.  I will post if it turned badly at the closing.

     

  • 11-07-2012 8:48 AM In reply to

    • Happy2
      Consumer
    • Top 500 Contributor
    • Joined on 07-10-2004
    • NC
    • Posts 120

    Re: Bankruptcy and refinancing home mortgage

    We bought house in 2000.  Our interest rate is 5.875% and we paid extra each month.  So our refinance amount is $136,000 for thirty years with the 3.5% rate.  I plan to pay off in less then ten years.

  • 11-07-2012 10:02 AM In reply to

    Re: Bankruptcy and refinancing home mortgage

    Happy2:

    We bought house in 2000.  Our interest rate is 5.875% and we paid extra each month.  So our refinance amount is $136,000 for thirty years with the 3.5% rate.  I plan to pay off in less then ten years.

    Looks good.

    Given that scenario your new payment would be about 610 per month just principle and interest. Taxes and insurance about 150 per month.

    To pay it off in 10 years would be about 1344 per month just principle and interest.

    That's very optimistic but if you can do that you'll save about 58,000 in interest.

    Not to mention the absolute euphoria that comes with owning one's home free and clear.

    I never could decide which was better: making that last mortgage payment and knowing you'll never have to make another, or the following month realizing you don't have to make a mortgage payment.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 11-23-2012 4:43 PM In reply to

    Re: Bankruptcy and refinancing home mortgage

    Hello Happy2, you have repllied to something I began research on today for a friend. Is there any way that we can communicate through this site other than these message boards? Thank you :)

  • 11-23-2012 7:08 PM In reply to

    Re: Bankruptcy and refinancing home mortgage

    1RebelLady:

    Hello Happy2, you have repllied to something I began research on today for a friend. Is there any way that we can communicate through this site other than these message boards? Thank you :)

    I doubt that Happy2 will be coming back. If not, then start a new thread with your questions and see if any of us can be of some help.

     

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 01-16-2013 1:08 PM In reply to

    • Happy2
      Consumer
    • Top 500 Contributor
    • Joined on 07-10-2004
    • NC
    • Posts 120

    Re: Bankruptcy and refinancing home mortgage

    I just logged in and saw your posting about researching the question that I had posted about refinancing our home. Would be glad to share information.  We are now refinanced! 

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