Thanks to low interest rates being offered by lenders around the country, millions of Americans have started to refinance their home loans and gotten better rates, lower monthly payments, and other benefits. But when you have bad credit, that refinance can seem like it’s out of reach. You can get a home refinance loan with bad credit as long as you understand a few key points. Keeping the following in mind should be enough to help you get the loan you’re looking for.
To start with, you need to set some realistic expectations for yourself. The truth is that while interest rates are still fairly low, the worse your credit score is the higher your rates will be. While they still could be lower than you’re currently paying, don’t go into the refinancing process expecting to get an incredible rate if you have bad credit. Once you accept the reality of the situation, you’ll be better prepared to start taking steps towards a poor credit mortgage refinance.
You can also take some other steps to improve your chances of getting a loan refinance. If you’re planning on refinancing, consider spending some time trying to build up equity in your home since it can make it much easier to qualify for a loan. Often, having bad credit and no equity will make it much harder than just having one or the other. Along with this, be sure to maintain a decent debt to income ratio, keep your job for as long as possible, and stay current on all payments. These are all things lenders will look at, and keeping them in mind will help you improve your odds of getting a home refinance loan with bad credit.
When you’re ready to start looking around at loan options, be sure to seek quotes from multiple lenders. This way you’ll be able to get a solid idea as to who can help you and what kind of rates to expect. Be sure to read all of the fine print and get a solid understanding of each loan so you can fully understand what you’re signing.
Also be sure to look at government insured loans. Loans available from the FHA in particular are worth considering, and an FHA loan could be available to you even when you have a poor credit score. Combine these types of loans with a lender that is willing to work with you, and you may be able to get the refinance loan you’re looking for.
Finally, don’t ignore the internet. There are lots of tools and resources available that can help connect you to the right lenders or government programs, so be sure that you spend time researching all of your options carefully if you want to be certain that you get the best chances of getting your bad credit refinance.
As long as you keep your expectations realistic and know where to look, finding a home refinance loan could be possible for you even if you have bad credit. It’s worth checking into, at the very least.