What are My Options for Home Refinancing With Bad Credit?

If you are looking to reduce your monthly payments and save money over your term by refinancing your mortgage, you have come to the right place! If your credit is less than ideal, you may wonder if refinancing is even an option. The good news is that you can refinance with bad credit. Still, you’ll need to prepare for some potential challenges. The average credit score of American consumers recorded in July 2019 was 704, which rose to 711 by July 2020, according to Review 42. We’ll discuss the important things you need to know before you apply to refinance with bad credit.

Recognize How Lenders Evaluate Your Credit Score

When you apply to refinance your mortgage, lenders will examine your credit score, payment history, and debt-to-income ratio. Your credit score is a summation of all the different aspects that determine how creditworthy you are, including your payment history, the total amount of debt you have, and the length of your credit history. Lenders will review your payment history to see if you’ve been making payments on time and to evaluate any recent late or missed payments. Your debt-to-income ratio measures how much you owe about how much money you earn. If this percentage is higher, lenders are more likely to consider you a riskier borrower.

Check the Current Interest Rates

To check the current interest rates, you can follow a few different approaches. Firstly, you can visit the websites of various financial institutions, including banks, credit unions, and online lenders. These institutions often provide up-to-date information on their websites regarding the interest rates they offer for different types of loans, such as mortgages, personal loans, or car loans. Additionally, you can check the websites of central banks or government agencies responsible for regulating financial markets, as they may publish official interest rates.

Another way to check current interest rates is by referring to financial news sources and economic websites. These sources often provide analysis and updates on interest rates, including changes in benchmark rates set by central banks. By keeping an eye on financial news, you can stay informed about any shifts in interest rates that may impact borrowing or savings.

Consider Applying for a Government Backed Loan

If you have bad credit, you may qualify for a government backed loan, such as an FHA loan. These loans are intended to assist customers with less than ideal down payments and credit ratings. They also have lower requirements for credit scores and debt-to-income ratios, which makes them a good option for borrowers with bad credit.

Look Into Other Refinancing Options

If your home has equity, you might be qualified for a cash out refinance or a home equity line of credit. These options allow you to tap into your home’s equity and use the money to pay off high interest debt, or make home improvements. However, they can be a risk, and may not be the best option for everyone.

Refinance With Bad Credit

Refinancing with bad credit can be complex. That’s why it’s a good idea to talk to a financial advisor to discuss the different refinancing options available. A financial advisor can help you understand the pros and cons of other refinance loans, and help you choose the one that best fits your needs. Shopping for the best refinancing offers is crucial if you find yourself looking to improve your credit score and need better credit. Different lenders may offer additional terms and rates, so it’s important to compare offers and choose the one that best fits your needs. Finally, be sure to look for lenders specializing in refinancing borrowers with bad credit.

Refinance Your Home With Union Capital Mortgage

If you’re looking to refinance with bad credit, Union Capital Mortgage is here to help. With our team of experienced mortgage advisors, we can work with you to create a customized refinancing plan tailored to your individual needs. We understand the challenges that come with bad credit when it comes to refinancing, and our team will work hard to help you obtain the best offer. To learn more about how we can assist you in refinancing your mortgage with bad credit, contact us on our website today or visit any of our three Ohio locations in Hudson, Mentor, or Westlake.