By admin, on August 18th, 2010
If you are looking for a mortgage refinance bad credit loan, your credit history will be a damper indeed, but it will not keep you from being able to refinance your mortgage. Just as many people are able to get an initial mortgage with bad credit providing they are willing to do what they can to prove that they are working on their credit rating, it is equally as possible to refinance your mortgage. There are a few things you can do in order to make sure your chances of being able to get one are as high as possible.
Credit Report
One of the first things you will want to do is to ask for copies of your credit report from all three agencies. Look over these reports carefully. If there are any errors on the report, such as late payments that were actually paid on time or accounts that are not yours, notify the agency and ask them to correct it immediately. You may want to ask for a reissue of the report once it is corrected so that you can take it with you when you apply for refinancing. Many times this will be enough to give the potential lender an idea of your credit history and it will avoid their applying for a report and thus affecting your credit score in a negative way.
Work on Your Credit Rating
You should also do all you can to improve your credit rating. Some things you can do include transferring balances from one credit card that is close to being maxed out to other cards to even out the balance. You should make sure that you pay all of your bills on time, before they are due, without fail.
Make a Portfolio of Recent Bill Receipts
You should try to collect up as many receipts for bill payments that you can as proof that you are regularly paying your bills on time and in full.
Work with a Mortgage Broker
Many mortgage brokers are able to find loans for people with bad credit. If you are having a difficult time finding someone willing to refinance your mortgage, you may find that a mortgage broker will have better success at doing so.
Look into FHA Refinancing
There are some FHA refinancing options that are available for people with poor credit ratings. Check into it and see if you qualify. If you previously received an FHA mortgage, you can very easily refinance that under the Streamline Refinance Option without a credit check needing to be made. FHA mortgage loans and mortgage refinancing is oftentimes easier to get than regular refinancing.
Have Available Cash for a Down Payment
Usually the larger down payment you are willing to make, the less your interest rates will be. You will also find it is much easier to refinance your mortgage if you have a sizable amount of cash to use as a down payment; it may make all the difference between your being able to refinance your mortgage or not.
Although it may be quite a bit of work to get yourself in shape financially, at least so that you can apply for and be accepted for refinancing, it is well worth the effort. It will force you to evaluate your current credit rating, pay your bills on time and by refinancing you will be lessening the financial burden you are currently facing.
By admin, on August 16th, 2010
Many homeowners these days have had a brush or two with late payments, even a repossession or bankruptcy; however, when homeowners want a home refinance, bad credit can haunt them and keep them from getting decent terms on the loan and refinancing paperwork. However, homeowners do not have to let their less than great credit scores haunt them anymore because there is an entire industry that can help them meet a refinancing loan easily.
One simple step a homeowner can take to secure a home refinance loan despite less than good credit is to find the right refinancing institution. Not only are there predatory lenders out there looking for people with poor credit to come knocking, they are hoping the homeowners are so desperate that they will agree to almost any terms, even if it means paying the highest interest rates. Sure, anyone with not so great credit is going to pay high rates in interest, but they do not have to be taken advantage of.
According to fair lending practices, the refinancing lender must attempt to give them the best rates possible. This means that those lenders who “agree’ to give a homeowner a loan to refinance their mortgage in exchange for paying a very high interest rate are wrong for doing so. Simply by doing research on a few lenders can keep this predatory lending to a minimum and possibly gets the borrower the best rates available.
Another way to keep interest rates to a minimum and improve chances of being approved for a loan includes not applying to more than three lenders. The more applications are made, the more the lenders will look into the credit history. In many cases, simply allowing a lender to look at the credit history can lower an overall credit score, whether they grant you the credit or not.
Doing the math is another way to make sure the homeowner is getting the best deal when refinancing a mortgage with poor credit especially if he did not have poor credit to begin with on the original mortgage. Because interest rates vary, as do closing fees, refinancing a mortgage with not so good credit may help in the end, but over time may cost more than planned. For example, the original loan costs $200,000 after all principle and interest is pad, even though the payments are in default, it is still a better deal than one that costs $300,000 after interest and principle is paid.
What is the difference between the two amounts paid? The second one is a mortgage refinanced with not so great credit. It factors in the higher interest rate and closing costs associated with a typical bad credit loan. While the first monthly payments may be less on a refinanced poor credit loan, the overall money spent is oftentimes two to thee times more than the original loan was. If this is something the homeowner thinks is OK with him, then refinancing the mortgage to cut short-term monthly payments would be a good idea. However, if the overall situation puts the homeowner in a place where overtime he would not be able to keep up, finding another option may be better short term.
Overall, if someone needs a home refinance, bad credit does not have to stop him or her from getting a loan. With the constant fluctuations in the market and the need for lower rates now than over time, sometimes a refinance now is not such as good idea so always do the proper research and math before a home refinance; bad credit does not have to continue to haunt you forever.
By admin, on August 13th, 2010
With the economy and the housing market first dropping to all time lows and then regaining some of its influence, almost everyone has had an experience with bad credit; refinance mortgage companies were developed to specialize in helping people with poor credit to refinance their mortgage, despite the credit problems. So how does someone with not so great credit and other credit problems refinance a mortgage that most banks would not touch?
A typical mortgage refinance will ask for specific items to prove credit worthiness such as references, extensive credit history and no bankruptcies and other such credit report blemishes. However those with less than great credit do not have such items, or they are even more sketchy then they the credit report. A homeowner can take some proactive steps to help with the approval of a refinance loan.
Essentially, a homeowner should do two things when attempting to secure a bad credit refinance loan for their mortgage. First, the homeowner should use a mortgage calculator to determine how much he can afford to pay in addition to the term in which he feels he can repay the refinanced mortgage. An important thing to remember and know before attempting to apply for a bad credit mortgage refinance loan is that when a homeowner has not so great credit, the interest rate he will be charged tends to be much higher than if he had good credit. In fact, sometimes this interest amount can be up to 28% or more, depending on an exact situation and the state laws that govern the interest amount charged. This interest amount is ultimately added to the principle amount.
For homeowners who wish to repay the refinanced mortgage in as little time as possible, he should keep in mind that the monthly payments will be higher and the overall amount paid in principle stays the same, but the interest paid will be lower. Alternatively, dragging payments out over a longer period can ultimately double or even triple the amount paid overall. If homeowners desire lower monthly payments, he should opt for a longer term on the mortgage repayment time. However, the overall total payment could be up to 10 to 20% more if he factors in the high interest rate he will pay.
Another thing to look at is whether the credit report is factual or not. While not extremely common, it is entirely possible that a homeowner’s bad credit score is due to mistakes on his report. Everyone is due a free credit report each year, so simply filling out the proper online form with the three major credit-reporting companies can give homeowners the opportunity to look at his credit report and find out where he stands. If there are mistakes, he can dispute them and possibly raise his score.
Knowing the repayment term possibilities before attempting to secure a refinanced mortgage loan is a good way to start because it can tell the homeowner and the lender what the feasible options may be and what the homeowner does not qualify for right away, saving time and money overall. Simply because a person has poor credit does not mean that all hope is lost when they need to refinance, for whatever purpose they have. The bad credit refinance mortgage industry is more than qualified to cater to those who need these types of loans
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