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Bad Credit Home Refinance At Large

If you are in a situation where you have to get a bad credit mortgage, there is probably some extra documentation that you will have to provide to the lender. There are a lot of programs that use to be available to people with poor credit, but those are not available options anymore. Years ago, you only needed a credit score of five hundred or better to qualify for a loan, but today it is tough to find a loan that you could qualify for unless you have a score at least above six hundred and twenty. It might be difficult, but it is still possible to get a loan, even with poor credit. 


When considering mortgage refinancing, you will want to take a good look into all the mortgage options and loan programs that are available. Be sure that is makes good sense financially to refinance your home before you head off and do it and end up in a worse financial situation. For example, it would be a good idea to go from an ARM to a fixed rate mortgage if the new rate will be lower than what the ARM is expected to adjust to. Another item to take a look at is your debt to income ratio because if your debts are collectively high when in comparison to your income, you might not qualify to get a fixed rate mortgage refinance. You might be able to qualify for a cash out refinance, however, if you use that cash to pay down the existing debts you have with a higher rate of interest, which will lower your debt to income ratio. 


If you plan to only own your home for a short amount of time, you may not want to refinance if the closing costs are high. If you are planning to sell within the next two years, it will not be worth it to pay closing costs on a refinance right now. If you are going to own the home for a lot of years and can recover the closing costs, that is when it is worth refinancing. Ask your current lender if they would be willing to do a streamlined refinance so the closing costs will be smaller and there will be less paperwork to do. If you pay the closing costs, rather than having them rolled into the loan, you typically will not need to get the home appraised. 


Having a poor credit score does not mean it’s the end of the world, because there are refinancing programs that will work for your situation. Really think about if it will benefit your situation before you actually do it.