Bad Credit Mortgages
What Lenders Look for When Refinancing After Bankruptcy
Before applying for a Pennsylvania mortgage refinance after bankruptcy, it is a good idea to know exactly what lenders will be looking at when evaluating your loan application. This will allow you to tailor your application to their standards and increase your chances of approval. Here are three items in particular that lenders look at when considering whether or not to give you a Pennsylvania mortgage refinance after bankruptcy:
Your Credit Score
One of the first things a lender will do after you file an application for a Pennsylvania mortgage refinance is pull a copy of your credit report and take a look at your credit score. They will then use the guidelines that they have in place to determine whether or not you qualify for a loan. If you want to increase your chances of approval, do your best to boost your credit score. As a basis for comparison, the average credit score in Pennsylvania is 696.
Your Loan to Value Ratio
Another important factor for lenders to consider before approving your Pennsylvania mortgage refinance after bankruptcy involves the value of your house and the amount of money you are trying to borrow–in other words, the loan to ratio value or LTV. To get approved for the refinance you seek, you will need your home to be worth more than the loan. This shouldn’t be much of a problem in Pennsylvania given the increases in home values over the last few years.
Your Debt to Income Ratio
New federal laws established in fall of 2006 prohibit sub-prime lenders from giving you a loan that you can not afford. These regulations apply to mortgage refinance loans and will prevent you from getting a Pennsylvania mortgage refinance if the lender considers your debt to income ratio too unbalanced.
