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Wiping Out Bankruptcy with a Cash-Out Mortgage Refinance

You might be surprised to find out that your Chapter 13 bankruptcy could make you an attractive borrower in the eyes of a mortgage lender—especially when it comes to refinance loans. This fact provides a wonderful opportunity for you to wipe out your bankruptcy with an Illinois cash-out mortgage refinance.

Choosing a Lender
After bankruptcy, traditional Illinois mortgage refinances may be difficult to obtain. Your best option will be to work with someone in the sub-prime lending industry. A sub-prime lender specializes in loan programs designed for borrowers with bad credit. Such lenders look at more than just your credit score. They factor in the amount of equity you have accumulated and your ability to make the required loan payments.

Getting the Loan
Because your home is probably listed as an asset in your bankruptcy estate, you will have to consult the trustee who is assigned to your case for permission to get an Illinois cash-out mortgage refinance. The trustee will help you to determine how you can wipe out your bankruptcy debts using the cash you receive at closing. They will also assist you in working with creditors to close out your accounts.

Loan Costs
While you may be eager to use an Illinois cash-out mortgage refinance to wipe out your bankruptcy debts, you will want to make sure you can afford the loan prior to taking it out. There are upfront fees to consider, as well as regular monthly payments. Upfront fees will include closing costs. These costs normally average $2,918 in Illinois, but because you will be working with a sub-prime lender, you may be expected to pay a little more. You will also pay a slightly higher interest rate through the life of the loan.