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Bad Credit Refinance

When looking to get a mortgage refinance, there are a few terms that you should be familiar with in order to understand the process more fully.  One of the terms that can be used often when going through a mortgage refinancing process is that of a bad credit refinance.  What is a bad credit refinance?  Let's go over some of the particulars about what a bad credit refinance is, how it works, and how one would obtain this type of refinance program.  

 

If you talk to a loan officer, or if you hear the term bad credit refinance, it is easy to think that one is working on their credit score, but this is not the case. The term bad credit refinance means that someone is looking to refinance their mortgage even though they have a bad credit score or history. There are bad credit mortgage options out there when it comes to mortgage refinancing, but understanding them can take a little research. For example, there are two main mortgage programs that people use when refinancing with less than perfect credit.  

 

These loan programs include FHA and VA programs respectively.  Why can these two programs help those with bad credit histories?  The biggest reason is because these mortgages are backed by the Federal Housing Administration.  This means that the mortgages are insured in the event that a borrower stops paying their mortgage payment.  Because the insurance is there, mortgage companies are willing to take the risk of borrowing to less than perfect credit candidates. 

 

To find out if you can get a mortgage refinance using a program like this, one should seek a loan officer.  A loan officer will be able to guide you through the qualification process.  Every major bank that lends to borrowers has in-house loan officers, which can simplify the qualification process that you need to go through.  After collecting income, work history, and credit scores, the loan officer will be able to determine if you qualify for a bad credit refinance.  With the way the market is right now, a bad credit refinance is a great way to lower your payments if you have lost a job, or if you now make less money than you did previously.  Because banks don't want a toxic asset, many banks are very willing to work out a bad credit refinance deal for someone that is looking for a mortgage refinancing option. The only way to know if one of these programs is available to you is by doing your research and by going through the qualification process.  

 

 

  10 Steps to Home Ownership:

Step 1: Are You Ready?

Step 2: Hire a Realtor

Step 3: Get Loan Pre-approval

Step 4: Search for Homes

Step 5: Choose a Home

Step 6: Obtain a mortgage

Step 7: Make an Offer

Step 8: Insure Your Home

Step 9: Close the Deal

Step 10: Avoid Foreclosure

 

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