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
Posts Tagged ‘Getting A Mortgage’
Get Lower Bad Credit Mortgage Refinance Loan Rates
December 7th, 2009
Getting a mortgage can prove to be a very difficult even for people who have got good credit. For the people who have bad credit, it is practically impossible.
However, there are some websites that will help you get bad credit mortgage refinance loan without a lot of hassles. Some of them will also to give you a faster turnaround time for the bad credit mortgage refinance loan.
The tips you should consider when applying for one are shown below. They will help you get a refinancing loan even if you are experiencing bad credit.
The first step will be to ensure that you apply from companies that exclusively help the people who have bad credit only. These are companies that have a specialty of assisting people who are in financial straits and they help them with their debts.
Avoid applying to too many lenders. Make a pick of the lenders who will have the best interest rates. You should be sure to have a loan term that will be conducive to your needs. Also be sure to choose one that has the lowest closing costs as well as few or no hidden fees.
Be careful when you are checking the interest rates as you will find that some may be low but the catch is with the additional costs and fees.
Such costs may make you’re your arrangement even more than what you had originally planned. Be sure not to present yourself as desperate because there are unscrupulous dealers who will take advantage of your desperation.
Bad credit home refinancing has been known to offer some benefits for poor credit owners. When you refinance, you can be able to lengthen the repayment period of your loan.
You can also be able to lower the monthly payments you make especially when you are unsure of your financial future. During the process, one can be able to repair their credit.
By having a favorable condition that is conducive to your needs financially, you will be able to make payments on time every month. Once you are able to satisfactorily commit to your loans, you will find that your credit score will improve as a result of making constant repayments.
These are the steps and benefits one can get form solving their mortgage crisis by getting a bad credit mortgage refinance loan.
By: Ricky Lim