Bad Credit Mortgage Refinance Loan

By admin, on August 22nd, 2010

For many people, a bad credit mortgage refinance loan could mean the difference between keeping their house and going into foreclosure.  However, finding such loans are not always easy.  The majority of lenders want applicants with good credit, especially as the economy continues to worsen.  This does not mean you should give up your quest for a home refinance.  In fact, if you follow the four steps below you can pretty much guarantee you will get the loan you need.

1. Negotiate with Your Existing Lender

If you want a bad credit mortgage refinancing loan, your lender should be the first company you turn to.  The reason why is because they have already entered into a relationship with you.  In addition, if you have made an effort to pay your bills on time, usually they will be more understanding about a refinance.  This is especially the case if you acquired bad credit through job loss, medical bills or other factors you could not control.

A mortgage counselor can provide additional assistance if you cannot reach negotiation on your own.  They will take the process a step further by discussing any applicable legal concerns.  Some may even conduct an investigation for fraud if they suspect wrongdoing on the part of your lender.

2. Apply for Fannie Mae’s Refi-Plus Program

Refi-Plus is Fannie Mae’s solution to the mortgage crisis.  It is available to anyone with credit scores below 600.  The only caveat is that your loan must be serviced by Fannie Mae.  If you do not know this information, you can visit their homepage and use their mortgage lookup tool.

If your loan qualifies, your new bad credit mortgage refinance could boost your home’s value.  This is because Refi-Plus refinances typically have a loan-to-value ratio of over 100 percent.  Such a high LTV would make your refinance worth more than your home.  As a result, your property value increases, even if it had previously been underwater.

3.  Consider a Streamlined Arrangement

Streamlined home refinances are an option if you are a Veteran or a holder of an FHA mortgage.  Through them, you can apply without a credit check or an appraisal.  What really matters is your existing payment history.  If it looks decent enough, you can qualify without providing any other financial information.

However, keep in mind that there are a couple of downsides to streamlined arrangements.  If you have an underwater mortgage, these refinances will not help you, as they do not exceed the amount of your original loan.  In addition, streamlined refinances usually charge very high interest rates.

4. Get a Quote from Subprime Lenders

Trying to get a bad credit refinance loan from a traditional bank is futile.  Instead, focus your search on subprime lenders.  They can be found through sites offering subprime mortgage quotes.  Simply enter in your information, making sure you are honest with each response.  The resulting listings will give you the name of the lender, the amount of interest you will be charged and an estimated monthly payment.  If everything seems acceptable, you can either call the lender or follow the link to apply online.  Should you do the latter, you will receive a response in a few days.

In conclusion, getting a bad credit mortgage refinance loan is not impossible.  With the tips provided in this article, you should be well on your way towards getting a decent refinance.  In the process, you will save your home and regain your peace of mind.

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Bad Credit Mortgage Refinance

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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Options Before You Get A Bad Credit Refinance Loan

By admin, on March 8th, 2010

It is always best to carefully consider your options before you get a bad credit refinance loan. As a common rule, this type of loan should be used as a last option because as you will pay out a considerable amount over your original mortgage loan.

On the other hand, bad credit refinance has several advantages for an individual with bad credit. If you are currently in a tight financial situation and you foresee defaulting on your home, a bad credit home loan would be worth considering to keep you in your home. For many individuals, the extra cost will far outweigh the challenges of qualifying for new housing in the event that you lose your home.

There are various ways to determine if a bad credit refinance loan is right for you. First, you need to closely examine your current situation. If you believe that you can catch up on missed payments and afford to pay the mortgage and other debts, your first step should be to reduce spending. This could be cutting back on trips to the mall or bringing your lunch instead of opting for fast food or restaurants.

If you believe are able to continue to paying the mortgage, there is a good chance that you can repair your credit rating and obtain financing options with lower rates later on. Your lender does not want to take your home back and is willing to work with you, but you have to communicate with them.

If you are in a place where foreclosure is inevitable, refinancing even with a higher interest rate may be your only option. Instead of allowing your home to be foreclosed by the lender, getting a mortgage refinance with bad credit is a realistic option to help you save your home even if it costs more in the end.

Thoroughly examining your situation before considering a bad credit refinance loan is a wise choice. This type of loan should only be undertaken as a last resort, but it is a viable option to help you save your home from foreclosure.

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