While most financial guru's recommend avoiding bankruptcy, some people discover that filing for chapter 7 or chapter 13 is their only alternative. Bankruptcy is extremely damaging to your credit. For the next seven to ten years, you can expect to receive ridiculously high interest rates on homes, cars, and personal loans. Fortunately, there are steps you can take to better your chances of getting a good rate. To begin, you must select the right lender.

Difference Between a Good Mortgage Lender and a Bad One

Mortgage companies are in the business of making money. Thus, they do not always have your best interest in mind. If you have poor credit or a recent bankruptcy, some lenders are reluctant to offer you a mortgage refinance. The lenders that do offer refinancing for poor credit applicants may add extra fees and a higher percentage. The goal is to boost their profit.

A good mortgage company will not take advantage of you. Instead, they will carefully review your situation, and offer the best rates possible. Of course, your refinance rates will be higher in comparison to an applicant with perfect or good credit. Still, a recent bankruptcy does not justify an interest rate that is 6 or 7 percent above the current rate.

Choosing a Lender to Refinance Your Mortgage Loan

When choosing a lender to refinance your home loan following a bankruptcy, you must be prepared to conduct your own research. Before applying for a refinancing, visit online websites and find information about the current mortgage rates being offered to individuals with bankruptcies or poor credit. This way, you can make your own comparisons.

Next, you should apply for a refinancing with your existing lender. If you have maintained a good payment history with this lender, they may be willing to refinance your mortgage with a low rate. You may select any mortgage lender. However, because you have not established a history with these lenders, they may consider you a risky applicant and refuse to offer you a new loan.

Getting Approved with Sub Prime Loan Lenders

If your existing mortgage lender and other traditional mortgage companies deny your application, you should submit an application through a mortgage loan broker. Brokers have access to many home loan financing companies. These include sub prime lenders who offer loans to people who cannot get approved through a bank or traditional mortgage company.

See my recommended After Bankruptcy Refinance Lenders, for the lowest rates online.

Carrie Reeder is the owner of ABC Loan Guide.