How To Successfully Complete A Home Refinance With Bad Credit

Guys I have to be 100% honest here – this isn’t an easy task. Finding a home refinance when you have bad credit isn’t going to be easy. However, once you learn the rules I think that many of you will be able to get it done.

What’s Your Credit Score Now?

The problem with putting together a resource that will help people to find a certain type of loan with bad credit is that they will have completely different levels of credit history. The only way I know to REALLY help people is by creating a list that you can use while breaking it down into sections, one for each credit score bracket.

Higher Than 720

If you’re above 720 you have what is considered to be A credit and will be able to negotiate a home refinance with any lender and will also be able to get prime interest rates.

Between 650-720

If you fall in this area you still have relatively strong credit and will be able to refinance your home without difficulty. Most lenders would be happy to lend you money but you might be penalized slightly on your interest rate.

Between 620-650

This category presents more risk to a bank, however, you will still be able to qualify to refinance homes with most lenders. You shouldn’t expect to get the best interest rates if you fall under this category.

Between 580-620

People who fall under this category will have more difficulty to refinance home with bad credit. This is because they provide a lot more risk for the bank and probably have a history of paying bills late. If you fall under this category and have no history of late mortgage payments you should be able to qualify for a loan. However, if you have late mortgage payments on your credit you may have difficulty.

For the bank, providing a home refinance for bad credit is about risk management. They don’t want to lend money to people whose credit is questionable and yours is questionable if you’re in this bracket. If you aren’t able to qualify for a loan on your own you may have to find a cosigner.

Under 580

If your credit score falls under the 580 range, it’s likely that you will have to find a cosigner to secure a loan. You provide excess risk for lending institutions. If I was trying to refinance my home with bad credit and I was in this category I would fix my credit as soon as possible and find a person who could help me to secure a loan by cosigning.

Many people are unaware that you can REALLY improve your credit score by paying down your credit cards. Your balances on your revolving credit lines account for more than 250 points of your credit score. If you’re carrying high balances, you are definitely getting hit on your credit. The cool thing about this aspect of your credit score is that it can be corrected within 30 days by paying off the debts.

The bottom line here is that finding a home refinance for people with bad credit might take some work. If you’re willing to do it, you can save yourself a lot of money.