Homeowners look for the best refinance options for mortgage for a variety of reasons. For instance, a homeowner may want to lower their interest rate after discovering that their mortgage rate predictions were incorrect. Other homeowners turn to refinancing in order to shorten their loan terms. Because of these benefits, even homeowners with bad credit want to refinance their mortgages. As a homeowner with bad credit, you are likely struggling to find an option that you qualify for. Read this post to discover the best refinance options for mortgage with bad credit.
Apply For A FHA Refinance Loan
One of the best mortgage refinance options for homeowners with bad credit scores is to apply for a Federal Housing Administration (FHA) streamline refinance loan. Because this loan for bad credit is backed by a government organization, it is highly valued by homeowners trying to refinance. After all, it is a safer option that still offers flexibility when it comes to credit scores. Moreover, the FHA Streamline Refinance option enables homeowners to refinance their mortgages quickly. You do not need to complete as much paperwork or undergo thorough credit checks that other options require. Keep in mind that this option only applies to homeowners who already have an FHA-backed mortgage. If you fall under this category, take advantage of this top refinance option for mortgage.
Ask About A Mortgage Recast
Another popular refinance option for mortgage is a mortgage recast. This options is great for homeowners with poor credit because lenders usually do not check applicants’ credit scores when offering mortgage recasts. To take advantage of this option, you need to contact your current lender. Ask them if they offer mortgage recasting. If they do, you can pay a decent amount of your loan off. In turn, you reduce your monthly loan payments. While you can pay more of your loan off without a mortgage recast, your monthly payment will only decrease with one. For this reason, ask your lender about a mortgage recast as a refinance option.
Consider A HARP Refinance Loan
Moreover, consider a Home Affordable Refinance Program (HARP). This mortgage refinance option for homeowners with bad credit is particularly useful for those seriously struggling to pay their bills. Thanks to a newer version of HARP, such homeowners can refinance their mortgages regardless of how in-debt they are. However, homeowners who have remained up-to-date on their monthly payments usually have an easier time refinancing through this bad credit option.
Apply For A Portfolio Refinance Loan
Many homeowners with poor credit scores also apply for portfolio refinance loans. Unlike most of the other refinancing options listed, private lenders offer portfolio refinance loans. Because of this, the requirements for this mortgage refinance option differs. One private lender may not even consider an applicant’s credit score while another checks credit, bankruptcy history and even employment. However, even lenders who do conduct thorough checks often overlook credit scores. They take other factors into consideration as a way to understand applicants’ situations. As a result, they still offer these loans to homeowners with poor credit scores. Keep this refinance option for mortgage in mind, but understand that it is never to late to clean up credit scores with the top tactics.
Find A Good-Credit Co-Signer
Finally, you can always find a good-credit co-signer to refinance your mortgage. While you may not have an impressive credit history, you might know someone else who does. Most homeowners turn to their spouses, family members and friends when considering this option. You need to choose a co-signer whom you have mutual trust with. Then, you will not ruin a personal relationship over your mortgage payments. When a good-credit co-signer signs a joint application with a bad-credit homeowner, the overall credit score on the application rises significantly. Consider this refinance option for mortgage if you have a good co-signer candidate in mind.
Contrary to many homeowners’ beliefs, you can refinance your mortgage without good credit. A great option to consider if you already have a FHA-backed mortgage is a FHA refinance loan. If you do not have a FHA-backed mortgage, you can always ask your current lender if they offer mortgage recasting. Another option to consider is the HARP refinance loan. You can also find a reputable private lender who offers portfolio refinance loans to homeowners with bad credit scores. Furthermore, consider finding a good-credit co-signer. Use one of these best refinance options for mortgage if you have bad credit.