Refinancing For Those WITHOUT Perfect Credit

Mortgage rates are the lowest they have been in some time. Recently Fannie Mae indicated that there were $5.6 trillion of mortgages outstanding in the U.S. and close to one-half of these were ripe for refinancing. There is also a record amount of home equity available for refinancing due to the fact that home prices have risen significantly more than inflation in the past several years.

But what about those who have not paid their bills on time? Will some be prevented from taking advantage of low market rates and reaching the equity in their homes? This same equity may be the key to easing short and long-term credit issues.

The answer is: almost anyone who owns a home, and has equity in that home, can find a mortgage program that will help. The important thing is to get with a qualified mortgage advisor—but in the meanwhile we would like to present a few tips that may help along the way:

Understand your credit situation. The reason you need to get with an expert is that many do not understand their present credit picture. Many believe that their credit is very poor and it is really not so bad. Others believe that their credit is good and it is really bad. You are not an expert. Running a credit report and reviewing this report is quick and inexpensive. It should be the first step in the process of understanding your credit situation.

If you can’t pay your bills on time, pay your mortgage first. When reviewing credit, your mortgage payment history is the most important piece of credit information. Yes, you should pay all of your bills on time, but, given a choice, the mortgage must come first.

Consider streamline choices. If you currently have an FHA or VA mortgage, you can be approved for a new loan with a lower rate without any standard mortgage documentation. Even a blemished credit history can be overlooked—with a few exceptions. These programs do not allow you to pull equity out of your home—but you can finance closing costs so there is no cash out of pocket.

Learn the new mortgage choices. Gone are the days when a blemished credit history means an unbelievably high mortgage rate. Today’s market for “sub-prime” mortgages is very sophisticated and there are more choices than ever. Even large agencies such as Freddie Mac are lending to those with not-so-perfect credit. More choices mean more competition and a better rate and loan programs for you. But you can’t take advantage unless you speak to a mortgage advisor with “credit challenged” expertise.

Find out how your mortgage can be the way out of a current credit predicament. Yes, a mortgage is a loan. And too many loans can be the reason you are in trouble in the first place. But only your mortgage can be paid over 30 years in such a way that your payments can be the lowest possible. Only your mortgage can grow in size as your home’s value grows. You might be struggling with $2,000 or more in monthly credit card payments and a $1,000 mortgage payment. Increasing the cost of your mortgage only a few hundred dollars each month might completely wipe out this burdensome situation. Would lowering your payment by hundreds of dollars every month help your budget situation?

Start repairing your credit now. Your mortgage advisor can refer you to a qualified credit counselor if they cannot help you get on top of your present situation. The problem will not disappear by itself. Experts help thousands upon thousands of consumers get on their feet everyday. The best time to start is now.

If you think you are a candidate for refinancing and you have not paid all your bills on time, the only mistake you could make is taking no action. Get with a qualified mortgage advisor today and explore the alternatives. What is the most you can lose? Your not-so-perfect credit record is one thing that comes to mind!…?