Many homeowners mistakenly believe that they cannot refinance their home mortgage due to bad credit. While bad credit certainly impacts the loan application process, you do have options. Once you know what your options are, you will be able to understand the long-term implications of refinancing your mortgage with bad credit.
1) Learn more about your credit. It’s quite frustrating to have bad credit when you are trying to get a loan. However, credit does matter so learn more about it. Be able to understand your FICO aka “Credit Score” and learn about the number of factors related to it and of your past financial activity. A potential lender needs to assess your ability to repay a loan on time and even though your credit score is a clear indication of that ability, the value of your home can allay your lender’s willingness in giving you a loan. Make sure you don’t fail on your mortgage payments or your lender can take your home.
2) Find the right refinance lender. Though this may be a tricky task, it is doable. Do a thorough internet search, and you will be able to find several lenders with quotes. Effective online research can help you choose the type of lender you want to do business with. Remember to develop a list of several lenders, compare different interest rates and make sure they can work well with your budget. Know all of your options available to you and know about lenders who work with sub-prime loans.
3) Know about the effects of refinancing your loan. Once you know your options for taking out a refinance loan, you will be better off. Since you may have bad credit, you may be forced to pay less than ideal interest rates. Nonetheless, refinancing your mortgage can still be beneficial. In-spite of paying a higher interest rate, you will have lower monthly payments. The term of your refinance loan will be longer than what remained on your original mortgage. In short, the process of refinancing your mortgage can help you improve your credit in the long run. Lowered monthly payments will help you save up more cash for other bills.
Once you have repayed your refinanced mortgage, you can refinance again for a lower interest rate. It won’t be long until your bad credit will be a thing of the past. With all these tips at hand, you will have a better chance at refinancing your mortgage with bad credit.
If you have questions, the Maryland real estate insurance experts at Colony Title Associates can be reached by calling 410 884-1160 or visit ColonyTitle.com today!
About Colony Title Associates:
Founded in 1995, Colony Title Group handles in excess of 2000 real estate closings per year in the central Maryland area. The founder Tee Tillman has over 23 years experience in the title and real estate law fields. Colony handles closings for several lenders, including banks, credit unions and mortgage brokers. Colony is the preferred choice for many real estate brokers in the area.
Colony Title specializes in real estate title insurance, real estate settlement services, and real estate closings in Baltimore, Columbia, Maryland, Washington DC, and Virginia. Our staff consists of licensed Title Insurance Agents, Real Estate Agents, Settlement Processors, & Attorneys to handle all of your real estate needs.