After filing Chapter 7 bankruptcy, you can keep your primary home. With your debts discharged, the mortgage payment should be more affordable. Even if you want to lower your mortgage payment, you might feel like it is a distant dream once you file for bankruptcy. After all, with the hit to your credit and a bankruptcy on your record, lower interest rates probably are not your first concern.
According to U.S. News, there is a waiting period before you can refinance your mortgage. The waiting period depends on the type of loan you have.
Waiting period for conventional mortgages
If you want to refinance, you have to wait four years, on average, to do so after filing Chapter 7 bankruptcy. If you had extenuating circumstances, the lender might allow you to refinance after two years. However, when you refinance after bankruptcy, your credit score requirement may be high.
Waiting period for Federal Housing Administration and Department of Veterans Affairs loans
Since the government backs FHA and VA loans, lenders consider these loans to have a lower risk. You must wait for two years following your discharge date to refinance. However, VA loans may allow you to wait only one year. This only happens if there are extenuating circumstances.
When you refinance your mortgage debt, you go through the process of taking out a new loan. If you have refinanced a home before, you have to go through the same process following the bankruptcy. Essentially, you apply for a brand-new mortgage. It is still possible to get a lower interest rate after the waiting period.