FHA Refinance – Bad Credit Score Mortgage Relief

admin — Sat, 01 May 2010 04:06:03 +0000

If your ARM ( Adjustable Rate Mortgage) is resetting, you are no doubt feeling the anxiety creep in knowing the fixed portion of your payment will be ending soon. This is quite understandable knowing that once rate reset s your monthly mortgage payment can jump hundreds of dollars, literally overnight.

You may have signed up for an ARM without knowing exactly how they work; the broker may not have explained terms like “Index” and “Margin” and “Libor”… components on which your new interest rate will be determined, no doubt adjusting to a higher rate.

It’s quite possible that your interest rate could reset 1 or 2 points higher in which case you would be paying a lot more per month.

Here’s a hypothetical but very common scenario…

You originally borrowed $250,000 on a 3 year ARM at 5.5% your monthly payment was $1419 (PITI).

At the end of the fixed period (36 payments) you will owe $239,716. Now you’ll need to refinance this balance – if you let the ARM reset it could easily increase tour interest rate by 2 points to 7.5%, which puts your monthly payment at $1673.

This is an increase of $254 per month to get out of that ARM and into a 30 year fixed rate mortgage! No wonder foreclosures are on the rise.

You need to consider refinancing your ARM into a 30 year FHA fixed loan.

The advantage of this program is:

- You don’t need perfect credit – No minimum FICO score
- Your credit trend is more important than your FICO score
- Foreclosure and bankruptcy won’t disqualify you
- Interest rates can be closer to what an “A ” credit borrower would qualify for
- Steady payment over 30 years.
- Can refinance up to 97% of appraised value of the home.

The brutal truth is that an FHA loan makes great sense and may very well be the only loan that will enable you to “keep your home” when faced with a resetting ARM.

By: Leslie Collins

Options For Getting A Mortgage With Bad Credit

admin — Sat, 06 Feb 2010 09:21:18 +0000

In a perfect world everyone would have a 720 credit score and a trouble free credit history. Unfortunately we live in reality and the truth is that many home owners have less then perfect credit scores. While bad credit can make refinancing a home loan difficult getting a mortgage with bad credit is actually easier then you think.

The first thing you must determine is how bad your credit actually is. Knowing your credit score will help determine your loan options and save you the headache of having to apply for a mortgage only to be turned down.

Bad Credit Refinance Options

If your score is 600 or higher then you more then likely will be able to secure a good low fixed rate FHA mortgage. Keep in mind that FHA requires your last 12 months mortgage payments to have been paid on time and your debt to income ratios need to be at or around 42%. FHA will refinance up to 97% of the value of your home so it works well for people with little to no equity in their primary residence.

If your credit score is under 600 and not below 500 you really have no other option but to use a sub prime lender. although they have gotten a lot of bad press lately sub prime loans can help people refinance their homes when other lenders turn them away. However never under any circumstance take a sub prime adjustable mortgage and always opt for the fixed rate. Sub prime loans allow you to refinance with mortgage lates, open collections and many other derogatory credit situations.

However if your credit score is under 500 you have some serious work to do because even sub prime lenders will not lend to borrowers with credit scores under 500. At this credit score level you have two options. You can either invest some time and money into credit repair to improve your scores to the level where you can secure sub prime financing. The other option is for you to use a hard money lender. Hard money lenders typically have very high interest rates and loan fees and should only be used as a last resort. They also only typically lend up to 70% of your homes value so they may not be able to help everyone based on those equity requirements.

By: Darin Sewell

Bad credit refinancing » Fha Mortgage

FHA Refinance – Bad Credit Score Mortgage Relief

Options For Getting A Mortgage With Bad Credit