Refinance post CH7?

[Diesel73L]

I saw the other thread about modifying post BK and I didn't want to hijack. We are underwater, but not the extent of most folks. We owe about $230K and the house is worth around $215K. We also only bought four years ago-we don't want to move and foresee any reason to in the near future. We locked in at 6.125% on a 30 year fixed which at the time was pretty good, but with rates as low as they are now, a re-fi could lower our payments quite a bit and make life after discharge a lot better. Could we make a deal with the bank about reaffirming in exchange for a re-fi?

[jst4f]

You can try, and some banks will deal. Think hard and long before you agree to reaffirm your loan. You went through a lot in your BK to be out from under your loans. It should be a really good deal for you to give that up. Remember you can't file BK again for eight years.

[justbroke]

While the terms can change in a reaffirmation, I haven't seen too many (banks) change the terms. Most will just do a straight reaffirmation. I highly recommend against reaffirming an underwater property (period). I do have some tolerance for properties underwater by no more than 10% of the value, but that's about the limit in my book. You should still have a really good reason!

Why not try to do this. Discharge the loan in the bankruptcy and then ask for a modification. In the modification, get a principal reduction and/or a rate reduction. You may even be able to get a re-amortization. (I'm assuming you have no other mortgages on the property other than the first.)

Then you have the best of both worlds! A discharged debt as well as a new interest rate (or lower principal).

[HHM]

Don't reaffirm.

Keep in mind, you DONT need to refi with the same institution and there is no requirement that I am aware that as part of any refi, the loan must have been reaffirmed.

The same rules apply, it will still be a year or two before you would be eligible to refi anyway, (because of the BK), so no point in wasting brain power on the issue...but don't reafirm, that would be a mistake.

Also, most people are predicting at least another 10-20% decrease in home values and we won't see a recovery in home prices until about 2020. (that number is based on how much dead housing inventory is in the system).

[Logan]

While the terms can change in a reaffirmation, I haven't seen too many (banks) change the terms. Most will just do a straight reaffirmation. I highly recommend against reaffirming an underwater property (period). I do have some tolerance for properties underwater by no more than 10% of the value, but that's about the limit in my book. You should still have a really good reason!

I think it should also depend on the value of the home. 10% is a big $ difference between a home that's worth 100K versus 500K.

[justbroke]

I think it should also depend on the value of the home. 10% is a big $ difference between a home that's worth 100K versus 500K.

I do tend to not be so harsh on a $1,000,000 home underwater by $100K over a $100,000 home underwater by $10K. There are other factors to consider.

Let's think of it as a starting point.

[Diesel73L]

Why not try to do this. Discharge the loan in the bankruptcy and then ask for a modification. In the modification, get a principal reduction and/or a rate reduction. You may even be able to get a re-amortization. (I'm assuming you have no other mortgages on the property other than the first.)

I suppose I could ask-the worst they could say is no. We're both resolved to not reaffirm under any circumstances. There are about a million other ways we can rebuild our credit.