Credit Refinance for Bad Credit Mortgages
Having bad credit is certainly an obstacle to home mortgage refinance, but it is not a complete dead end. California bad credit mortgages signal expected road blocks such as more stringent terms to get approved for refinance, but bad credit home mortgages will not close the door on your options.
There are several suggestions on how bad credit refinance is possible. Many sub prime lenders understand that borrowers across the country have suffered employment setbacks and now have less than perfect credit. If you find yourself in a situation where you've fallen behind but are still making late monthly payments, with effort and persistence, you should be able to refinance a bad credit home mortgage.
1) Save Money for CLosing Costs and Other Fees. California Refinance for bad credit mortgages will cost a small percentage of your overall loan and you should be prepared to pay the start up costs. Bad credit refinance is essentially like taking out a second mortgage. Sometimes getting approval for home mortgage refinance can be more easily accomplished by putting down a larger initial down payment. To take advantage of this option, you will need to have some money saved up.
2) Work toward reducing your credit card debt. High balances have a direct impact on your credit score, relative to your total limit. If you are only paying your minimums each month, you won't be making any progress because you'll essentially be paying interest only on that debt. Late or missed payments will further add to a lowered credit score (on FICO scale) and typically lead to higher interest rates on your account.
3) Check & Correct your Credit Score. Your credit score is only as good as what has been reported, so make sure it is accurate. Look at reports from the 3 main credit bureaus and check for any mistakes. Bad credit will typically cost you 4 ½ percentage points higher of an interest rate for your home mortgage refinance, but it can be done. California refinance is on par with the rest of the country in having tighter loan requirements since the sub prime mortgage meltdown in 2006. Before this, a FICO score in the 600's was acceptable for home mortgage refinance. In today's climate, a FICO score less than 680 automatically drops you into the subprime borrower category. This means higher interest and ultimately paying more for your loan. The beauty of being a homeowner with bad credit is that you have a house to use as collateral. If you also have some equity in your home, you may even get a favorable interest rate! It's not likely, however that you'll get as good of a rate compared to a borrower with a FICO score of 700 or better.
4) Do your Homework. Find out about government approved loans and what the qualifications are for FHA, Sub Prime, and bad credit home mortgages. Even though you may have less than perfect credit, you still have the right to ask questions and research your options. Is debt consolidation refinancing a viable option for you? If you're not prepared to pay a higher interest rate, extend the life of your loan, or change the terms of your loan (to an adjustable rate, balloon or two step mortgage), this may not be the best choice for you. Debt Consolidation refinance will help you get out of financial trouble in the short term, but is only available to borrowers with equity in their homes.
5) Be persistent & Keep at It. Getting bad credit home mortgages refinanced, especially California refinances, takes persistence. You may need to submit several applications as you search for the right lender. Don't get frustrated! There are nationally distinguished, full-service lenders who specialize in bad credit refinance and you will find one if you keep at it. Using SmartQuote.com's simple online form is a great way to connect to multiple mortgage lenders who will get in touch with you to discuss your options.