Refinancing your home may still be possible with a poor credit score, while you most likely won’t qualify for the lowest interest rate available. Therefore, the main question is can you still refinance on terms that make it worth your time?
Before you begin shopping for rates, start by cleaning up your credit. Begin a history of paying all of your bills on time, try even making more than the minimum payments on your current debt, paying off credit cards, and limit your spending while avoiding the establishment of new credit lines that can improve your credit score shockingly fast.
Your credit score can also quickly be improved by confirming there are not any errors on your report. Furthermore, decreasing your debt-to-income ratio will help your standing among lenders. The total of the monthly mortgage expenses, including payments, taxes, and insurance, as well as any other monthly debt payments, such as auto payments and credit cards, should not surpass 43% of your gross income.
Naturally, having a stable income history, having liquid assets which illustrate your ability to make multiple payments on the loan, and by having established equity in your property as increase your odds of qualifying for a respectable rate.
Keep in mind, 20% down payment is always required to avoid private mortgage insurance (PMI). Also, PMI will most likely cost you between $50 and $200 per month, according to the balance of your loan and PMI rate.
By taking these steps will help maximize your chances of qualifying for a beneficial rate.
Moreover, a hidden advantage you should explore would be government programs, for instance Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP). These programs are free and are designed to help lower the interest rates and your monthly payments.
Government aid programs have been since extended. But you should take advantage of this option because they will all expire December 31, 2013.
Speak with a Mortgage Specialist to discuss any questions
Contact US Mortgage Corporation toll free: 1-800-562-6715
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