Monday, July 25, 2016

Refinancing With A Low Credit Score

Interest rates are at historic lows.  More homeowners than ever before are considering refinancing.  Think about it interest rates in 1998 for a 30 year fixed mortgage were on average about seven percent; today interest rates sit at an average of between three and three and a half percent.  That is a huge savings for homeowners not just each month but over the entire course of owning the home.  Refinancing allows homeowners to lower their monthly payment which can allow many to use the extra money for upgrades to the home that increase the value of the home overall.  One problem that plagues some homeowners is less than stellar credit.
Homeowners with poor credit ratings can have a difficult time refinancing their current mortgage.  Often this goes unrecognized until you begin the process of refinancing.  Homeowners often think they are basically refinancing the same mortgage amount just for a lesser interest rate so why does it matter if their current credit isn’t up to par.  For them it is the same mortgage just at a lower interest rate.  This however is not how mortgage lenders see it.
Credit scores are used to determine an individual’s ability to pay debt back in full.  A low credit score gives lenders the impression that you are taking on too much debt for the income that you have coming in.  The snap shot of your current financial situation puts you at a higher risk then when you financed your original mortgage.  The scores of an individual’s credit can range between three hundred, at its lowest, to eight hundred and fifty, at its highest.
Homeowners will pay lower interest rates with higher credit scores.  With less than stellar credit it’s important to make sure that the savings you are looking for with the lower interest rate will really exist for you.  You need to consider the actual rate you will be given.  A homeowner with an eight hundred and fifty credit rating will receive a lower interest rate than those with poor credit.
Refinancing doesn’t always make sense for homeowners that have poor credit after they take into consideration an extended loan term, closing costs, loan fees, and more.  When combining these concerns it maybe that refinancing actually increase the overall cost of your mortgage even with the lower interest rate.
When your credit is less than perfect it is especially important to work with a mortgage broker to find the mortgage refinancing option that works best for your situation.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at

Seeking Out Non-Traditional Financing For Mortgages

There are times when an individual’s credit rating doesn’t match their intentions.  When a borrower has met with the unexpected in life such as a divorce, medical bills, job losses or poor money management it can wreak havoc on their opportunities to get financing.  This can deter many individuals, especially when wanting to obtain a mortgage, discouraged.  The thought is that people with poor credit will never achieve homeownership however this is not necessarily the case.  People seeking home ownership with less than perfect credit should work with a mortgage broker to search out non-traditional methods and more creative financing to obtain a home loan.
The first step that people with poor credit should do when considering the possibilities of a future home purchase is to start to take steps to improve their credit.  A lengthy history of delinquent payments isn’t a good thing but the change in those habits can be.  A change in the habits you have with your bill paying can help creditors see that you are working towards change.  Start by resolving to pay down debt to less than thirty percent of your available credit line.  Don’t apply for more credit, pay creditors on time and eventually you will start to improve your credit score.
Mortgage lenders will want to see that you have history making a payment for housing.  It may make sense to rent for two years to establish a housing payment history.  During that time make sure that the payment for your rent is paid for on time, every month.  An occasional late car payment or credit card payment could be overlooked but it is crucial that mortgage lenders see your ability to pay housing consecutively for at least two years prior to receiving a mortgage.
During the time you are renting, work to save money for a down payment.  The larger the down payment on the home the more vested lenders will view you.  A solid down payment for a first time home buyer is twenty percent even though there are mortgage options that don’t require this large of a down payment it helps those with poor credit.
Another feasible option for homeowners with imperfect credit is to find a lease option that can lead into the possibility of ownership.  Motivated sellers can often be talked into a purchase agreement with an unconventional twist.  If you find the right seller you can even work in a deal where they use the money paid on leasing as payment towards the home.
mortgage broker is the first individual that most individuals with poor credit should speak with before even thinking about looking for a home to buy.  Loan brokers have seen it all, more than your credit situation is not unique.