Refinance With Credit Score Under 500

admin — Wed, 05 May 2010 05:48:16 +0000

If your credit score is under 500 and you need to refinance your mortgage you have severely limited options when compared to someone with a credit score over 500. Most sub prime lenders will not accept a below refinance loan from a under 500 credit score borrower. However all hope is not lost and you do still have some options to refinance even with a credit score under 500.

One option many credit score under 500 refinance borrowers turn to is a hard money lender. Hard money lenders are typically equity driven and do not look at credit score. They are mainly concerned with making in the short term, therefore many hard money loans will have interest rates over 10% and many will have funding fees of up to 5% of the loan amount. You will however need 30-40% equity in your home to secure a hard money loan. All though not cheap they can help you refinance with a credit score under 500 to get cash out to pay off debt or stop a foreclosure.

Another not so widely known option for a credit score under 500 refinance is an FHA loan. FHA is backed by the federal government does not have any actual minimum credit score requirements, instead they look at overall credit profile. This type of underwriting is just what the below 500 refinance borrower needs. With a FHA refinance you will need to prove financial responsibility and explain why your credit score is under 500. For example if your credit score is under 500 due to medical bills but all your other payments were on time then FHA more then likely will help you with a credit score under 500 refinance. You will however have to show valid proof of positive payment on your consumer credit accounts. FHA will even accept payment history on alternate credit accounts such as the cable bill, electric bill and cell phone bills. What FHA will not accept for a credit score under 500 refinance is a borrower who just did not pay their bills and was irresponsible.

The best option for a homeowner with a credit score under 500 is to find a local FHA refinance expert and talk to them about your situation. Many times based off experience they should be able to tell you if your credit score under 500 refinance will be FHA approved or not.

By: Darin Sewell

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 » Hard Money Lender

Refinance With Credit Score Under 500

Options For Getting A Mortgage With Bad Credit