Though refinancing immediately after bankruptcy is possible, you will not be able to properly reap all of the benefits. With a fresh bankruptcy on your record, you are bound to be stuck paying a high interest rate. If the rate is any higher than the rate on your current mortgage, you may end up costing yourself more money. Unless you are facing foreclosure or need to borrow from your equity, taking time to rebuild your credit prior to refinancing your New Mexico mortgage is highly recommended.
Refinancing Six Months After Bankruptcy
If you started to work on repairing your credit immediately after bankruptcy, you should see some difference in your credit score within 6 months. If your credit score is high enough, this could be the optimal time to refinance. A New Mexico mortgage refinance after bankruptcy can allow you to start fresh with your mortgage, net you a lower rate, and give you a chance to rebuild your credit.
Refinancing Two to Three Years After Bankruptcy
Within two to three years after filing bankruptcy, your credit score should be back to normal and closer to the New Mexico average of 663. This means that you can qualify for conventional loan rates?currently at 5.63 percent. If you currently pay a rate of 8 or 9 percent, you stand to save an enormous amount of money over the life of your loan. Depending on the size of your loan, you could be saving as much as $100 to $200 every month. Just think of the extra cash that you would have to save, invest, or pay off other debts!
