Bad Credit Refinance Options
76
Refinancing your mortgage can be a viable way to consolidate your debt or get out of a high rate sub-prime mortgage. However, If you have a FICO credit score below 680-700, you will find it difficult to refinance your mortgage. You will need to look into what is referred to as a bad credit refinance. There are three basic types of lenders that provide this type of refinancing: hard money lenders, sub-prime lenders, and FHA.
Bad Credit Refinance with Hard Money
Hard money lenders should be used as a last resort only. They lend to borrowers with a credit score lower than 620 or those who have other issues such as a foreclosure or need large amounts of cash. These lenders are individuals or small companies that offer private money loans at exorbitant interest rates. It is usually better to try to improve your credit score to at least 620 than to go with a hard money loan.
Sub-prime Lenders
Sub-prime lenders were all the rage until the housing market crash. Now they are harder to find. If you are looking for a sub-prime lender, do a lot of research and shop around. There are many services online where you can fill out a simple form and receive quotes from several lenders competing for your business. You'll want to compare not only interest rates, but also fees, service, and privacy policies.
FHA Bad Credit Refinance
FHA loans have taken the foreground in bad credit refinancing in recent years. They are advantageous to borrowers due to their better refinance rates and loan to value (LTV) ratio. LTV is the ratio of the value of your home to the amount of the loan. Though FHA requires a credit score of 620, the maximum amount you can borrow is based on your debt to income ratio, which is your total outstanding debt in relation to your verifiable income.
Whether
you choose traditional cash out refinance or another type such as an
interest only refinance, do your homework and consider the disadvantages of a bad credit remortgage as well as the advantages to ensure that you have
made a good long term decision. You can get more information about bad credit refinancing at Bad Credit Remortgage Info.
More Articles by Beth Parker:
- Instant Loans
What can you do if you have an emergency that requires cash, such as a car repair or a utility shutoff notice, and you don't have enough cash? If it's something small, you can probably borrow from someone... - Debt Negotiation
Mounting debts can send you into a panic. Since it is so embarrassing, most people will not discuss their problems until they are out of control. Debt negotiation is the solution for people who cannot... - Credit Card Debt Settlement
Are you tired of creditors calling? Is your mailbox full of debt collection letters? Unless you are in such dire straits that you cannot save any money, you can settle your credit card accounts for... - Credit Score Range
We hear a lot about credit scores but how many of us really know what they mean? In order to understand your FICO credit score, you need to know the range that your score falls in. Then you need to... - Unsecured Loans
Unsecured loans are also referred to as signature loans. They are loans that do not require any kind of collateral or security. You don't have to put your car, house or boat up as collateral to get an...
