We all have our reasons why we want to get out of debt. One of these is to be able to refinance an existing loan to enjoy certain financial gains.
Refinancing is the process of resetting the term of a mortgage. When a person is qualified to do refinancing, he or she will enjoy the following benefits:
- Monthly payment reduction
- Interest rate decrease
- Get rid of mortgage insurance
- Completed mortgage account repayment
- Switch to a fixed rate
- Receive cash back
After knowing the benefits of refinancing, the next question is “How?” And let us qualify the question further. How do we refinance a loan even with bad credit?
Check possibilities with your current lender.
Financial institutions come up with an offer palette for its customers periodically. And there are instances when a person who does home loans with bad credit gets a good deal. There is no secret formula in this strategy to fish for a more reasonable interest rate. All you need to do is pick up the phone, ring your lender and probe.
Pay a large amount and recast.
Have you heard about recasting? This is the process of paying your existing loan with a significant amount of money for re-computation. This is done to reduce the borrower’s monthly amortization. Moreover, recasting translates to loan reduction, savings on interest charges, and expedited mortgage repayment.
Go for FHA streamline refinance.
The FHA (AKA – Federal Housing Administration) is a government agency that is dedicated to increasing homeownership in America. It offers “streamline refinancing,” a financial option intended for government-backed home loans. It requires less paperwork and verification. So, if you have an FHA loan, find time to check if you qualify for this.
Check streamline refinance for a VA mortgage.
This is the same with FHA streamline refinance in concept. Only, this program is dedicated to VA mortgage. Your mortgage must be current if you will go for this one. Make sure that you have no late payments over the past 12 months. And lastly, you must have owned the home for at least six (6) months.
Say hello to HELOC loans.
HELOC means “home equity line of credit.” It works like a credit card. Although HELOC is a form of bad credit refinance loan, mortgage lenders are resistant to this. As you know, not all entertain remortgage with bad credit.
Settle for cash-out refinancing.
Cash-out refinancing is a generally more acceptable option for borrowers with bad credit. This type of loan pays off an old loan account. It will allow you to get cash from the difference between your balance and 80% of the home value.
Visit your local credit union.
Credit unions are known to be more grounded financial institutions in terms of relationship building with customers. They welcome borrowers who are buying a home with poor credit. Checking their offers must be on your to-do list while looking around for alternative options.
Remove a co-signer.
Still wondering why you’re stuck at the bottom of your finances? Probably because you have a mortgage co-signer with poor credit. Review your loan agreement and check if one of your co-signers has a problematic credit status. Remove the person at once to continue with your own remortgage application.
Improve your credit score.
This is easier said than done, but yes, this is important. Have the discipline to monitor your cash flow and your personal loan reduction strategies. You know very well that an impressive credit score is your passport to get the best potential deals available.
Experts say that you should research for your bad credit refinancing for 30 days at most. Do you have the time though? Are you confident that you will get the result that you want? If the answer is “No,” reach out to Credit Repair Now.
Credit Repair Now specializes in bad credit refinancing in Canada. Our company can answer all your inquiries from credit score improvement to bad credit loan application approval.