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Can I Refinance with Bad Credit?

Can I Refinance with Bad Credit?

October 9th, 2019 | Credit, Refinancing a Home

Mortgage interest rates have tumbled in recent months, making refinancing more appealing than ever. As of the latest Mortgage Bankers Association survey, refinance request volume is up 180% over last year. There may be some homeowners who would like to take advantage of the interest rate savings but worry they may not qualify because of poor credit. If you are part of this crowd, here are several ways to make refinancing a reality:

Learn Your Options

Start with an open discussion with a lender. Let them know you do not have the best credit but that you would like to refinance. They have definitely seen your situation before and likely have several programs tailored to your situation. For example, if your current mortgage is an FHA loan, you could qualify for the FHA Streamline Refinance. It does not require a credit check and may not even require income verification. These loans have minimal paperwork and a quick turnaround time. VA loans have their own refinance program that does not require an appraisal or credit checks and it will even allow you to roll the closing costs into the total of the new loan. Your lender may also have their own unique programs that will help you cash in on current rate savings.

Find a Cosigner

If you have a very loving family member with good credit who is willing to help you out, asking him or her become a co-signer on your refinance is one way to boost your odds of qualifying and getting better rates. Their stellar credit history can help negate your less-than-perfect score. This is a huge risk and responsibility for your co-signer though,  so make sure you both understand the potential consequences if you default in the future.

Improve Your Credit

Bumping up your credit score does take time, which means you may miss out on today’s interest rates, but it may be worth it in the end. A better credit profile will help you qualify for lower rates anyway. You can start by pulling a copy of your report and checking for any errors. Correcting these could have an immediate effect on your score. Of course, the biggest impact on your credit is a history of timely payments, so while you’re preparing to refinance, focus on paying all your bills on time. Other credit improvement tips include not opening any new credit accounts and reducing your balances on all accounts to less than 30% of their limits.

No matter which refinancing avenue you decide to take, remember that all mortgage loans require fees and closing costs. These should be factored into your decision to refinance. A lower interest rate is not the only factor to consider in the equation. Be sure that all the costs are clearly spelled out so that you determine if you will truly be saving money with a refinance loan. 

If you have poor credit, you may not be able to qualify for the very lowest rates available, but there are still plenty of options available to help you save money on your current mortgage loan.

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Holmgren and Associates

DBA of Finance of America
4200 Broadway
Oakland, California 94611
Phone: 510-339-2121
NMLS 0910184/1071
 

Holmgren & Associates is a branch of Finance of America. We are a full service mortgage banker with an experienced staff offering expertise in residential mortgage lending, with primary focus on loans for home purchase, refinance, and reverse mortgages.

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©2019 Holmgren & Associates is a division of Finance of America Mortgage LLC |Equal Housing Opportunity | NMLS ID #1071 (www.nmlsconsumeraccess.org)| 300 Welsh Road, Building 5, Horsham, PA 19044 | (800) 355-5698 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act
Questions, comments, concerns? Send to customerrelations@financeofamerica.com 

This is not a commitment to lend. Prices, guidelines and minimum requirements are subject to change without notice. Some products may not be available in all states.  Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision.  Any materials were not provided by HUD or FHA. It has not been approved by FHA or any Government Agency.  A preapproval is not a loan approval, rate lock, guarantee or commitment to lend. An underwriter must review and approve a complete loan application after you are preapproved in order to obtain financing.  Questions, comments, concerns? Send to customerrelations@financeofamerica.com