Bad credit refinancing » Refinancing A Home Loan

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 Mortgage Refinancing – Can You Refinance a Home with Poor Credit?

admin — Fri, 27 Nov 2009 02:25:27 +0000

Because of low interest rates, many people are refinancing their homes. While individuals with good credit have little difficulty refinancing their home mortgage, if you have bad credit, you may have to search for a lender that will offer a good deal. Nonetheless, refinancing with poor credit is possible

What is a Mortgage Refinance?

When you refinance your home, you are creating a new mortgage to replace the existing mortgage. Because the process is similar to applying for a new home loan, you are expected to pay closing costs and other fees such as title search, attorney fees, and prepayment penalty fees. If you are unable to pay additional fees, refinancing is not the right option.

Why Refinance a Home Mortgage?

There are several reasons for refinancing your home mortgage. For starters, if you purchased your home before interest rates decreased, you likely have a fixed rate that is at least three points higher than current trends. In this case, refinancing is a smart choice – if you plan on staying in your home. By refinancing your current loan, you may save hundreds of dollars a month.

Furthermore, refinancing is perfect for individuals who received an adjustable rate mortgage. Adjustable rate mortgages fluctuate throughout the duration of the loan. Thus, your mortgage payments may increase. By refinancing to a fixed mortgage rate, your monthly mortgage payment remains the same.

Bad Credit Refinancing

Refinancing a home loan with bad credit requires effort on your part. You have to search for the best deal. Because of your credit situation, most lenders will take advantage of you. They will charge a huge interest rate and huge fees because they know your options are limited.

When applying for a refinancing, contact your current mortgage lender. If your payment history is good with this lender, they may be willing to negotiate a decent rate. Before signing on the dotted line, you must shop around.

Sub prime lenders are another great alternative. Because these lenders specialize in high risk loans, they have various loan programs for individuals with poor credit. Submitting an application online is the quickest and easiest method for obtaining a quote.

By: Carrie Reeder

Bad Credit Mortgage Refinancing – 3 Reasons to Refinance for a Better Rate

admin — Tue, 03 Nov 2009 11:12:44 +0000

Individuals with bad credit often assume that it is impossible to
obtain a refinancing or home equity loan. However, this assumption is false.
Because a new mortgage and home equity loan is protected by your home,
mortgage lenders are more eager to offer money. Do not allow bad credit
to stop you from refinancing. By refinancing your home, you may
actually improve your finances and credit.

Refinance Mortgage Loan for Cash-Out Option

If you are hoping to improve your credit, refinancing your home and
obtaining cash at closing is a great alternative. The money you receive
can be used for any purpose. In most cases, homeowners put the money to
good use and payoff old credit card balances, consumer loans, and past
due accounts. Bad credit is typically the result of paying bills late,
missed payments, excessive debt, and unpaid medical and utility
expenses. If you consolidate and lower your debt-to-income ratio, your credit
score will improve.

Lower Monthly Mortgage Payment

Although bad credit justifies a higher interest rate, if you purchased
your home during a time when interest rates were higher than 9 percent,
a refinance may actually lower your rate. While you may not receive a
prime rate of 5 percent, an interest rate reduction of two or three
points will decrease your mortgage. The money you save can be used to pay
bills, which will ultimately improve your credit rating and score.

Convert Adjustable Rate Mortgage to Fixed Rate Mortgage

The biggest reason for refinancing a home loan is to obtain a fixed
rate mortgage. Initially, many homeowners choose an adjustable rate
mortgage because the rates are lower. However, these mortgage rates have the
tendency to increase or decrease. The consequence of rising interest
rates is a rise in mortgage payments. Because fixed mortgage rates are at
a record low, several homeowners with good and bad credit are locking
in at low rates.

Bad Credit Refinancing Lenders

Traditional mortgage lenders rarely offer refinancing loans to bad
credit applicants. To refinance with poor credit, you will have to obtain a
loan from a sub prime lender. Choosing the best sub prime lender
requires a little effort. If getting the lowest rate is a top priority,
contact several lenders and request online quotes. Review each quote
received, and go with the lender that offers the best refinance package.

By: Carrie Reeder