Having a bad credit score can do a lot of damage and can prevent you from getting a lot of things in life. However, having a bad credit score is not the end; you can improve your credit score or learn to work within your score for things. When people have poor credit, they tend to believe that the possibility of refinancing a mortgage is out of the question. However, it is not; those with subpar credit are able to refinance, even if it is still difficult to do so.
There are some tips to remember when you try to refinance with poor credit scores.
The first thing to remember is that you will not receive low interest rate offers. Since you have poor credit scores, it shows that at one time in your adult life, you were irresponsible with money that was lent to you, such as loans or credit cards. When a financial services company sees this, it can be a warning flag. Due to this, some companies will still downright say no to your application; although, like this point is stating, some will say yes but will still be cautious and give you a higher rate.
The second thing to remember is that borrowers usually have to have equity on their property.
Even with the changes in the system that currently allow those with homes underwater to refinance, many lenders and mortgage brokers will still very well say no to them. However, this newfound grace on homes that are underwater is not a very popular belief for lenders, brokers, and bakes at the moment. Consequently, if you do not have equity on your home, getting a refinanced mortgage is not guaranteed to be in the cards. Even if you have a tidbit of equity on your home, your chances of getting refinanced are still not guaranteed. Why is this the case? Well, because banks and such tend to shy away from properties with little equity due to the fact that the new home mortgage is based on the current market value of the home and property.
The third to remember is that you can consider government insured loans. Lenders and brokers. If you refinance with a FHA loan, you are able to get away with little equity on your home and refinance.
If you have poor credit and need or just want to refinance your current mortgage, do not worry; you can still find ways to achieve your hopes and dreams in regards to your home. To refinance a mortgage and get good mortgage rates, you just have to find the right mortgage broker.
By John Moore