Refinancing your house’s mortgage with a good credit history is pretty easy. This is especially true if it is higher than that time when you applied for a loan. What does this mean? It means you will have a lower monthly payment, a lower interest rate and a lesser amount throughout your loan.
However, what if you don’t have a credit that is not that great? What would you do? Upon checking your previous score when you first purchased your house, you found out it’s even lower than before. What then?
Well, we have good news for you! A lower credit score does not prevent you from refinancing your home’s mortgage loan. And with how low the rates are, it might be a great decision to consider getting a cash out refinance Midland for your house.
What You Should Know When You Have a Bad Credit
When refinancing with bad credit, you should know that you have to prove how trustworthy you are to the lender which does not rely on your credit score.
You can opt to find a lender who does not check credit scores and use them to qualify whether an applicant can borrow or not. You can check SoFi and its FICO-free loans. Another option you have is to bring in another borrower with a strong credit history.
You might consider checking a lender who makes use of the Ultra FICO score. This bases your score on your financial behavior, the positive ones, that is. These include maintaining healthy bank balances and regularly depositing in your savings.
Tips In Refinancing With A Bad Credit Score
If you don’t need the money yet, you might want to improve your credit score first before going on and applying for your refinance. This often qualifies you for fewer costs during your new loan and a lower interest rate. How awesome is that?
How should you do this? You can start by paying off your debts. Choose the ones with the highest interest first. Check your credit reports and settle any of your collections. If you find out that there’s an error, report to your agency and ask them to correct these mistakes. Also, try to avoid opening new credit or taking a new credit card or loan if you want to refinance.
Here are a few tips for you if you want to refinance your house when you have bad credit.
Choose a lender who specializes in manually underwritten loans or low credit borrowers
Aside from the SoFi alternative, there’s also the New American Funding if you want an alternative to mortgage lenders. They provide loans and specialize in refinancing options for people who have lower credit scores.
Look for a co-signer
Do you have friends or families who have high credit scores? Why not add them as a co-signer to your loan? It might help you out. However, be sure to ask the loan officer first. Some lenders take the lowest score on applications while others will average the scores.