Considering mortgage refinance for financial emergencies, debt consolidation, and interest rate adjustments can be a good option, but you may not think so if you have bad credit. After all, most lenders often look for good credit reports and scores that don’t have too many risks. However, this is just a misconception because there are considerable options available in the market.
Mortgage refinancing can be a tough call to make, and you should take extra caution before opting for them since they may affect your savings, housing equity, and other assets. To consider your options and compare outcomes, refer to the following:
Mortgage Refinancing Options If You Had a Bad Credit Score
- FHA streamline refinancing. Opting for FHA streamline refinancing is a good option for those with FHA loans and wish to adjust the monthly payments permanently. Bad credit individuals can go through this program, but they have to meet the average credit score for FHA borrowers, which is updated yearly by the Department of Housing and Urban Development. Just take note that this is not a cash-out refinance option, so consider other options when necessary. One of the main benefits of FHA streamline refinancing is it can have a faster turnaround rate and less paperwork since the lender has no need to do an income verification, credit checks, and high-cost appraising. You can also get some of the upfront mortgage insurance premium as a refund, provided that you refinance within the three-year period when your current FHA loan closes. Consult with mortgage professionals to determine if this option is the best for your situation.
- USDA streamlined assistance program. Much like its FHA counterpart, the USDA Streamlined Assist program is another mortgage refinance option for those with bad credit since there is no credit review and even no house inspection needed. Best of all, you don’t have to worry about your debt-to-income ratio, which is a huge factor for many mortgages. As an alternative, they after those with USDA loans or mortgages backed by them. Note that only those who made a year’s worth of timely payments qualify for this option. Also, there should be a 50 dollar net reduction or tangible benefit to acquire this mortgage refinance option, so you should be prepared for that.
- Portfolio refinance loans. Portfolio loans are mortgage refinance options that have set guidelines by brokers and other financial institutions. Some of them do have bad credit-friendly programs, but you have to meet their requirements. The good news is most of the eligibility criteria are more flexible than other loans, and you can get more leverage if you work with a reliable mortgage company that provides a range of portfolio loaning programs suitable for your financial needs. On the downside, you do have to present your credit report and finances before getting approved for portfolio refinancing. If the lenders fear losing money upon receiving your documents, they can reject your application. It would be best to work with a trustworthy mortgage company with plenty of connections to find the right refinancing program.
Mortgage refinancing can be the right thing to do, even if you have bad credit. It is just a matter of exploring your options, checking your eligibility, and comparing interest rates. Meanwhile, if you are having trouble deciding on all of the choices mentioned above and want to find the most appropriate solution for your current situation, work with the experts like our team!
Apply For a Mortgage Today at Desert Springs Mortgage LLC
Are you looking for a professional mortgage company in Phoenix to help you with your refinancing options? Consult with us at Desert Springs Mortgage LLC. We can offer you full-service brokerage services, allowing you to free up your financial resources while keeping your housing assets in check. Contact us today at (623) 432-1309 for more information about our bad credit refinance options and other concerns.