Can I Refinance My Mortgage With Bad Credit?

June 23rd, 2011 | Author:

If you think your credit score – a simple three digit number – is harmless, well, think again. Credit scores when properly maintained will promise to be your best friend. It guarantees you an easy approval for any mortgage loan and it offers the best interest rates you can have when you borrow money. Poorly handled credit, on the other hand, can hurt you in various ways. If you apply to refinance mortgage with bad credit and they deny you, it is then you realize it is not a friend at all.

Bad credit ratings have been considered as a hindrance to a borrower’s application for mortgage. Mortgage lenders hesitate to grant approval of loans to those who have credit scores of below 700 because they are regarded as high risks.   While good credits have a wider array of options available, bad credits do have options to choose from too though limited.

If a person has bad credit, he may still qualify for mortgage refinancing. The typical credit score needed to refinance mortgage is 720 or higher. Nonetheless, there are certain lenders who help people to refinance mortgage with bad credit. They may, however, require additional documents and charge higher interest rates in contrast to those who have good credits. Still, it may be the answer to most of people’s qualms.

A credit score for a refinance mortgage may be low if one chooses to go through home equity. One is also allowed to refinance mortgage with bad credit using this method.  A home equity of about 20% allows the person to refinance to the usual mortgage. However, if the home equity is less than 20%, the person might still have difficulty in finding lenders.

Increasing the savings or reserves is yet another way to refinance mortgage with bad credit. It is vital to save up money for the additional closing costs and other fees that are thereby attached. Having extra reserves makes you less vulnerable to the financial problems that may arise later on. An increase in salary or income and in paying off debt on time has its benefits too. It makes you look pleasing to the lenders because of your ability to manage debt on your own thereby lowering your risk as a borrower.

If you do get approval from a lender, do your best to get lower interest rates by putting in a huge amount of initial payment or by using paying points. Paying in large amounts can give you a better prospective and maybe even a full percentage off.

To apply for a refinance mortgage with bad credit is never easy. Typically, mortgage lenders don’t approve those who can’t achieve the credit score needed for refinance.  So, if you got the chance you wanted, make sure to pay your bills on time. Follow your agreement with the lenders religiously and do your best to save yourself from dismal credit ratings. Bear in mind that this might be your only chance to refinance a mortgage with bad credit.

Newest Answers

Credit Card Advice for New Graduates

June 26th, 2017 | Author:

[I]f you’ve recently graduated or plan to this summer, you may be planning to enter the world of being an adult. You’ll get a job, maybe an apartment and car, and probably open a bank account if you don’t already have one. You may also decide to get a credit card with your new income. […]

Continue Reading »

3 Reasons to Start Out a Marriage with Good Credit

June 23rd, 2017 | Author:

[W]ith summer comes plans for weddings, big beautiful bouquets, a gorgeous wedding dress, garden ceremony and many other unique plans. Of course, each of these items cost money, which can add up to thousands of dollars. What many couples fail to plan for as they dream of their wedding is how to start out marriage […]

Continue Reading »

Why the Employed Struggle to Survive

June 21st, 2017 | Author:

[E]ven those with full-time jobs often end up struggling to pay their bills and protect their credit rating. They live paycheck to paycheck with barely enough left over to last until the next payday. With reports of the economy improving and a low unemployment rate, this may not make sense. One theory is that shifting […]

Continue Reading »

How to Save Money on Vacation This Summer

June 19th, 2017 | Author:
h

[P]eople look forward to summertime partially because they have a vacation planned. It’s a chance to get away and take a break from the stresses of life. Unfortunately for those who live on a tight budget, coming back from vacation may be a dose of reality they would just as soon forget. You can imagine […]

Continue Reading »

Financial Steps to Take Before You Graduate

June 16th, 2017 | Author:
h

[I]f you’re about to graduate college and enter the workforce, you want to start out on the right foot. It’s all too easy to get caught up in the idea of a steady paycheck and make some bad financial decisions. Here are a few things you should do about your finances before you graduate. Think […]

Continue Reading »

How to Sell Stuff to Make Money

June 15th, 2017 | Author:
h

[Y]ou have a bill to pay and you don’t have the money. Or your car broke down and you don’t have the extra funds to pay for the repair. One way to come up with cash when you need it is to sell something you own. However, it’s not always as easy as it sounds. […]

Continue Reading »

Have You Become a Financial Adult?

June 9th, 2017 | Author:
h

[A]s a teenager and even college student, you probably had your parents looking out for you. They helped with expenses even if you had a part-time job. Now that you have entered adulthood with a full-time job, you feel like a grownup. But have you grown up financially? You Know How to Budget A person […]

Continue Reading »