Sub prime lenders are not likely to provide you with as low of an interest rate as you can receive from a traditional lending institution. Following a bankruptcy, your first stop in refinancing your home should be the lender that holds your mortgage currently. Not only do they know your payment history, and the home, they may also save you some money in closing costs by keeping the loan "in house". If they are not willing to refinance your mortgage, ask them what you should do to make yourself more attractive. If they recommend that you come back after three to six months, which is probably the best advice. If they are not interested in refinancing your mortgage, don't let it discourage you, shop mortgages at other traditional lenders.
Another reason for refinancing is you have your eye on a certain piece of property that you want to buy to start a business or if you are planning that vacation of a lifetime, but you are afraid it will be too late by the time you round up enough cash to do this. Here you need to have immediate cash and you find out ways to do it. Refinancing your mortgage will give you the cash you are looking for and leave your mind at peace to continue on with your plans.
Many complain about this kind of solution because refinance loans are mortgage loans and thus imply closing costs that can make the loan more expensive. Yet, truth is that though a home equity loan can have no additional costs, when you refinance, all the costs are included in the new loan which is in turn cheaper than a home equity loan. Therefore, chances are that the costs will pass unnoticed and on the long run, refinancing can be less expensive than getting a home equity loan.
Be sure to get a "good faith estimate" and "Truth in Lending statement" from your mortgage broker before jumping into a new loan that could cost thousands of dollars (if not hundreds of thousands) over the life of your new loan. Get your mortgage broker to explain not only what your monthly payment will be, but also what your new loan balance will be compared to your old loan, what the new interest rate is, and how many years you will be adding to your repayment schedule if you do refinance.
What complicates matters even more is that there is really no indicator as to when the housing market may stabilize and turn to positive ground. Given the unknown, yet heavily projected number of home foreclosures yet to be listed on the market at the same time when home loan mortgage rates may be shifting upward, home valuations may not get better, in fact, may get worse for the foreseeable future. Some recent existing home sales figures have come in at better than expected rates, but a trend it does not make. In reality, the housing market is no different than any other market; it's all about supply and demand. Simply put, there still exists a glut of distressed-sale homes on the market and the home purchase demand is just not there yet. Most likely, the housing market will be at the mercy of the employment market for any pronounced increase in home sales. When people are either out of work, underemployed, or feel the risk of losing their job, buying a new home isn't typically the number one concern on the agenda. What's more is that many potential home buyers seem to be waiting out the market in anticipation of further declines in home prices.