Refinancing after a bankrupcy

Q: Do you have to reaffirm your mortgage with a bankruptcy to refinance the mortgage loan today?

Minneapolis, MN:  I hear this question on a fairly regular basis, and the plain and simple answer is NO.

You DO NOT need to reaffirm a mortgage loan that was in a bankruptcy to refinance that loan today. Anyone telling you otherwise is 1000% wrong.

refinance mortgage bankruptcy affirmation reaffirmationIf you did not reaffirm your mortgage during your bankruptcy, the mortgage did not disappear. It is still a lien on your house.  It is still owed and must be paid unless you are willing to risk losing the property.  The mortgage company — the servicer — virtually always wants you to make these payments.  And they often don’t care about the reaffirmation and will not waste their time (and your money) asking for it during the bankruptcy case.

If you pay, you get to stay

If you don’t pay, you will be foreclosed on and have to vacate the house.  The bankruptcy will protect you from ever having to pay any loses ON THAT LOAN.  But if you sign and take out a new loan, it is a new debt, a new loan, and the previous bankruptcy protection from the old loan is gone.

The problem new lenders have is because of the bankruptcy, the current lender is no longer reporting your payment history to the credit bureau.  A new lender is required to get a current payment history, and that can sometimes be very difficult.

The Loan Officer is Wrong!

With that said, some lender want you to reaffirm.  Sort of stupid, but that is up to them…  Not every lender feels the same way. Plenty of Loan Officer are also simply wrong in saying you need to reaffirm the loan first. If you are talking to someone telling you you need to reaffirm to refinance, call a different lender.
If you in this situation for a property in Minnesota or Wisconsin, we can help you.  Just apply online or call (651) 552-3681