If you find yourself unable to refinance or get a home loan because your credit score is too low, you are not alone. Millions of American consumers saw their fico score drop drastically since the Great Recession. And while most lenders are straying away from subprime, we continue to finance low credit score mortgage programs in all 50 states. Not all mortgage companies prohibit home refinancing with low credit scores. We recently announced several new programs for first time home buyers with low credit scores and the feedback has been amazing.
You have a mortgage and want to refinance. That is an excellent idea, as homeowners routinely use mortgage refinancing as a way to cash out equity in a home, reduce monthly payment amounts, and/or reduce the total interest paid on the loan.
That sounds great in theory - and for many it works quite well in reality too. However, if you have a low credit score, it may not necessarily be a slam dunk for you to qualify for a mortgage refinance loan.
If you are wanting to do a home loan refinance with a low credit score, here are 5 steps to beating the system:
1. Understand where mortgage rates are today in a historical context: Start your journey by spending 10 minutes doing a bit of homework. Specifically, have a look at the historical interest rate trends for the loan in which you are interested and see how they compare to today's rates. For example, assuming you would like to take out a 30-year fixed rate mortgage as part of your refinance, look at the historical trend for 30-year fixed-rate mortgage loans. Look, in particular, at 3-month, 1-year and 3-year trends. This will give you a good idea for where loans are today as compared to those historical trends.
2. Know the best 3 and worst 3 things on your credit report: Now, spend a few moments really getting to know your credit report from each of the top monitoring agencies. Have a look at your report as per Experian, Transunion and Equifax. When you do, look at the scores, of course, but go deeper than that: look at each line item. See if you can isolate the 3 best and 3 worst things about each report. Be prepared to talk about each set of "best" and "worst" items to your prospective mortgage refinancing lenders.
3. Gather together at least 4-5 "bad credit mortgage refinance lenders": Now it is time to start hunting for a loan. To hunt properly, you have to hunt where the game are. When it comes to a person with a low credit score looking for a refinance loan, you will want to seek out "bad credit mortgage refinance lenders." Make sure your list has a minimum of at least 4-5 lenders on it.
4. Try to call rather than fill out an online application: Applying online is totally okay if that is what you prefer. However, you should consider calling your prospective lenders instead. Why? Because, this will give you a chance to have a dialogue with them about those line items on your credit report. Remember, bad credit refinance lenders look at not only your credit score - but rather they go much deeper into your report. Not every lending agent is willing to get into such a dialogue with you, but keep trying until you find one that is more open to negotiating.
5. After receiving your offer(s), ask them what it would take to get an even lower interest rate: Now, once you have received one or more offers, compare them to figure out which offer gives you the best rate. Then, go back and ask the best lender if they can offer you something even better. It does not hurt to ask.
Take these 5 steps to beating average mortgage lenders at their own game by going to bad credit refinance lenders who specialize in working with people in your situation.
Bad Credit Home Financing - With rates at record low, buying a home is very appealing to consumers even if their fico scores are sub-par.
Refinancing with Bad Credit - Certainly one of the most effective methods for increasing cash flow is to refinance mortgage and debt with lower fixed interest rates.
Bad Credit House Loan -
New programs offer hope for first time home buyers and people that need another chance getting a house.
Low Credit Score Mortgage -
Getting a mortgage with poor ratings from Equifax, Trans Union and Experian is a strong possibility with good will from the borrower and reasonable compensating factors.
HARP Mortgage Refinance -
If you have a depreciated home and an unwater mortgage that is owned by Fannie Mae or Freddie Mac you may qualify for the Home Affordable Refinance that does not evaluate "loan to value" into their underwriting equation.
Conforming loan amounts are quoted up to $417,000 for Fannie Mae and Freddie Mac programs. Conforming-Jumbo rates may vary by zip code, so you will need to speak directly to the loan company to achieve pricing accuracy. FHA loan amounts vary based on geographical location as well.
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