Bad credit refinancing

In todays tough financial times many homeowners have slipped into having bad credit. With the rise in gas, food and everything else many people are finding it hard to pay bills on time. Combine this with the large amount of adjustable mortgages getting ready to increase and the drop in property values many people are heading for disaster

Although just a few years ago bad credit house loans were readily available through lenders that offered a huge variety of programs that let people finance 100% of their homes value with low credit scores, recent bankruptcies and even without actually proving their incomes. Many of these sub prime loans were also written with very inflated appraised values.

Today though is a different story for people looking to refinance with bad credit. Most of the sub prime lenders have all but disappeared and the ones that are left no longer offer the aggressive programs that let these borrowers buy their homes in the first place. To make matters worse lenders are frequently reducing the homes appraised values to protect themselves in the event a borrower defaults.

The FHA has stepped in to try and help these borrowers but even the credit score requirements for an FHA loan have increased to the 580-600 range.

In addition to higher credit score FHA requires the last 12 months mortgage payments to be paid on time. While an FHA loan may help some home owners it does not help anyone with a lower credit score and possibly a one or a few missed 30 day late payments.

If you are trying to refinance to save your home or reduce the burden of an adjustable mortgage your best bet is to call you lender and see if they will either give you a longer fixed rate period on your adjustable loan or modify your mortgage to a fixed rate. With todays tight lending market and reduced property values this may be the best option for bad credit home owners who are unable to refinance.

By: Darin Sewell