Here are some bad credit mortgage refinance Frequently Asked questions that we have been asked.
What is considered a bad credit score for a mortgage?
Credit scores range from 300 (low) to 850 (best). Scores between 580 and 620 are considered low. Below 580 is when you enter bad credit territory. When your FICO score is below 580, you can still get a mortgage, but the terms of the loan will not be as good as someone with a good credit score.
What does that mean my loan won’t be as good?
Because you pose a higher risk to the mortgage lender, they will charge you a higher rate of interest on the mortgage as opposed to someone with good to excellent scores.
What should I do?
The first thing to do is to see if you can raise your credit score. This can be done several ways. Do not open any more credit lines. Yes it’s tempting to get a new store credit card when they offer you 10% off, but this only going to hurt your credit score and cost you more in mortgage interest in the long run. Another thing to do is to lower your outstanding credit card balances to below 33% of your available credit line. Example, if your credit card has a credit line of $3,000, don’t borrow more than $1,000 against it.
Are interest rates negotiable with a bad credit mortgage?
They won’t tell you this but the answer is yes. People with bad credit have very different reasons as to why they have bad credit. You may be able to sit down with the lender and explain your situation. Maybe you have recently got a raise or a better job so you can afford more each month. Perhaps you just paid off a car or a credit card and it isn’t reflected on your credit history yet. Remember it always pays to try to negotiate with a mortgage lender.
Should I just go to the mortgage company in my area?
NO! With the Internet, all mortgage companies are now local so to speak. You can easily show for your mortgage on the web instead of calling each lender for their rate quote. You are able to visit their site and compare rates and terms with other mortgage lenders you have found online.
How can I improve my credit score?
One way may be to get a bad credit personal loan first. Pay it off quickly so you can show the credit companies you can handle debt and are able to pay it off ahead of time. This may raise your credit score.
Hopefully this answered some of your questions. Now go use the power of the Internet and check out mortgage lenders online to get the best bad credit mortgage refinance rate.