Top 5 Questions to Ask When Refinancing a Mortgage with Bad Credit
Refinancing a mortgage with bad credit can be challenging, but there are steps you can take to make your loan application more attractive to banks and other prime lending institutions. Below are five questions you should ask yourself when preparing your application.
1. What is My Credit Score?
Your credit score is the most important factor affecting whether you'll be approved for financing. And even if you are approved, refinancing a mortgage with bad credit can result in thousands of dollars in additional interest over the life of the loan. Before applying for refinancing, take some time to review your credit report and pay off any outstanding or defaulted credit accounts.
2. Do I Have Any Savings?
Banks and other financial institutions will be more likely to approve your application if you can demonstrate that you have enough cash reserves to pay your home loan in the event of a job loss or other emergency. If you have a healthy savings account or are expecting an increase in pay, you'll want to be sure to highlight this information when refinancing a mortgage with bad credit.
3. Is My Application Attractive to Lenders?
Borrowers with low credit scores and blemished credit histories are considered high risk by banks and other prime lenders. To get approved for refinancing a mortgage with bad credit, you need to show lenders that your credit issues are behind you. One way to do this is to establish positive credit. You can do this by opening a new credit card and paying the full balance monthly.
4. Can I Find a Co-Signer?
When refinancing a mortgage with bad credit, you may need to have someone co-sign the loan. If you ask someone to co-sign your loan, you'll want to ensure he or she understands that they will be responsible for the debt if you fail to repay it.
5. How Much Equity Do I Have?
Different lenders have different requirements with respect to the amount of equity needed to refinance. Before applying, it's a good idea to find out how much equity you'll need. You'll also need to know how much equity you have. If you owe more on the current mortgage than the home than the property is worth, you're unlikely to be approved for refinancing mortgage with bad credit.
Taking some time to consider the questions above will improve your chances of getting approved. Contact us for more information about how to make your loan application more attractive and to refinance a mortgage with bad credit.Request Mortgage Info
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