Refinancing under Chapter 13

[Calico]

I have made several payments as a result of starting my Chapter 13. It would be a tremendous relief if I could refinance my current mortgage and pay off all my debt to the trustee, their lawyer, my lawyer, and even my second mortgage. Of course I would never be in this situation had it not been for the delinquency I had accumulated in debt prior to this point.

I do have good equity in my home and I'm hoping this could be a plus, but with my past history and now being in Chapter 13 is there any hope out there for me? I'm not really looking to get personal cash out of this. If I I could though that would be tremendous.

I'm definitely open to suggestions on how to proceed.

Calico

[HHM]

Don't want to burst your bubble, but at a minimum, you typically need to be in your chapter 13 for at least one year before a finance company will even touch the situation. You may want to run some numbers on this, it is not always in your best interests to refi out of chapter 13. Generally, if your current plan pays less than 100% to your unsecured creditors, than it is NOT in your best interest to refi out. (at least not until you are near the end of your plan). Also, the other main problem, is that, odds are, the mortgage you get on the refi will be at worse terms than your existing mortgage (because of the chapter 13).

[Monty2000]

HMH - you seem pretty knowledgeable about this, let me run this past you.
Calico - sorry to steal your thread, but this is all good info for you also, I have been in my Bk for over a year, so my situation is a little different than yours...
Just last month I went through a lot of talks with different mortgage companies. They were willing to Refi me out of my mortgage - 2nd mortgage & BK. All at a reasonable interest rate, adjustable for 2 years, then it goes up.
I was really interested at first, then took the time to analyze it, and while the initial relief of being out of debt and starting to rebuild by credit all looked great, the bottom line numbers did not make since at all.

I currently owe 135k on 1st mortgage at 6.875% (15 years into a 30 year)
45k on 2nd mortgage adjustable to prime rate.
approx 42K on BK paying out at 100% debt.

That totals 222K that I could get into a refi at around 7.5% for the first 2 years, then I would have to refi again. closing costs would be approx 7k.

If I just wait about 42 months, the BK would be gone, I would owe 30 something on the 2nd mortgage and owe about 120 something on the 1st. There would then be a light at the end of the tunnel, where 41 months from now on the other side, I would have had to refi again, 7k more in closing costs, and still owe about 225K with 28 years to pay on a 1st.

I should probably take this data and post it in a finance forum somewhere to see if it all makes since. Doing the refi would really help out short term, giving me more money to play with now, but kill me in the long run.
btw - I do have a lot of equity in my home.

That's about it, any good thoughts?

Thanks
Monty

[defyint]

Be Careful With Mortgage Companies Refi

It is quite frustrating dealing with mortgage companies. They all tell you they can help & will have you waste alot of time.

[MTG_BANKER_OH]

I have made several payments as a result of starting my Chapter 13. It would be a tremendous relief if I could refinance my current mortgage and pay off all my debt to the trustee, their lawyer, my lawyer, and even my second mortgage. Of course I would never be in this situation had it not been for the delinquency I had accumulated in debt prior to this point.

I do have good equity in my home and I'm hoping this could be a plus, but with my past history and now being in Chapter 13 is there any hope out there for me? I'm not really looking to get personal cash out of this. If I I could though that would be tremendous.

I'm definitely open to suggestions on how to proceed.

Calico

Typically you need to be in the chapter 13 for a year and you may be able to get an FHA loan at 95% or less of the homes value to pay it off. But if you are getting close to having the Chapter 13 completed you may want to just hold on unless you can not keep up the payments anymore. Because being clear of the Chapter 13 in a few years or rolling that debt into a 30 year loan may not be the best way to go. You may have immediate releif but it may not be the best long term situation. Everyones situation is different.