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Refi while in open BK13!

sports1965
Frequent Contributor

Refi while in open BK13!

Is it possible to Refinance mortage while in an open BK13?

Message 1 of 6
5 REPLIES 5
NC_Mtg_Loaner
Valued Contributor

Re: Refi while in open BK13!

Yes.  You do need to have 1 year history of paying your trustee/creditors on time while amidst your CH. 13 and obtain permission from the court to do so as well.   FHA or VA is likely to be your only choice of loan though.

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 2 of 6
homeloanexpert
Established Contributor

Re: Refi while in open BK13!

Yes it sure is. I have done hundreds of these over the years. The process is pretty simple and straight forward. All government loan programs i.e. FHA, VA and USDA allow for borrowers to purchase or refinance a home while in an active Bankruptcy Chapter 13 as long as you have made the most recent 12 months payments on time (not being 30 days past due) to the Trustee.

 

You will need to provide the Loan Officer a copy of your Voluntary Petition with Schedules and copy of your payment summary to the Trustee. The Loan Officer will take your application, run your credit and review your income and asset documentation. 

 

Providing you meet the lender’s criteria, they will issue you a Pre-Approval spelling out all the details to include maximum sales price, loan amount, maximum interest rate and total payment. In addition, the Loan Officer needs to provide the Court with a copy of your loan application and the fee sheet showing the necessary funds to close.

 

There are two methods of accomplishing a Court Approval. The Court will either except the documents listed above, or they will want the additional items. For purchases,  the petitioner may need to be under contract on a home, it just depends on the Court. You will need to ask your Attorney which one is applicable.

 

Your Attorney who will then request a motion to incur debt. The Court should approve your request and issue an approval. In 30 years of doing home loans, I have only seen 1 Judge deny my borrower's petition. The process can take 5 days and up to 1 month depending on the Court. I hope this helps!

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo, Portfolio and NonQM Loan Products. Licensed in AL, AR, AZ, CA, FL, GA, IL, IA, IN, LA, MI, MO, NC, NE, NV, OH, OK, OR, SC, TN, TX, VA and WI.
Message 3 of 6
mikethewxguy
Established Member

Re: Refi while in open BK13!

Sorry to hijack...but have a similair situtaion...but Chapter 7/Refi. VA Loan.

 

What about in an active Chapter 7 (just filed last week)?  Today, I received an email from my Mortgage company with a refinance offer on my VA home loan/mortgage that would be great for us (rate drop by nearly 1% and $+200 less per monthly payment.  Is it possible during Chapter 7?  My attorney said it was basically up to me as there is nothing that prevents me from refinancing during a chapter 7.

 

Mortgage company said the following:

 

  1. You would make your August payment.  We would close towards the end of August and you would skip your September payment with the 1st payment on the new loan taking place October 1st.
  2. No appraisal required
  3. No credit report required
  4. No credit documents required
  5. We would get you as close to -0- at closing.  You would not owe any money.

Thoughts?

Message 4 of 6
NC_Mtg_Loaner
Valued Contributor

Re: Refi while in open BK13!


@mikethewxguy wrote:

Sorry to hijack...but have a similair situtaion...but Chapter 7/Refi. VA Loan.

 

What about in an active Chapter 7 (just filed last week)?  Today, I received an email from my Mortgage company with a refinance offer on my VA home loan/mortgage that would be great for us (rate drop by nearly 1% and $+200 less per monthly payment.  Is it possible during Chapter 7?  My attorney said it was basically up to me as there is nothing that prevents me from refinancing during a chapter 7.

 

Mortgage company said the following:

 

  1. You would make your August payment.  We would close towards the end of August and you would skip your September payment with the 1st payment on the new loan taking place October 1st.
  2. No appraisal required
  3. No credit report required
  4. No credit documents required
  5. We would get you as close to -0- at closing.  You would not owe any money.

Thoughts?


Why are you filing CH. 7 BK?

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 5 of 6
mikethewxguy
Established Member

Re: Refi while in open BK13!

Why?

 

Loss of job & loads of debt! 

 

Regardless, I have decided to not even try for the refi at this point. My online Mortgage account updated to show the Chapter 7 Bankruptcy.  I'm pretty sure it would be retracted anyway...

Message 6 of 6
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