Saturday, August 6, 2011

How to refinance with bad credit

I am here to inform you of a multiple ways you can refinance you home loan with poor credit .Often a refinance to consolidate your debt is not the most wise to do. It depends on your situation. If you're below about 680 or so on the FICO scale,you're probably have to contend with higher interest rates on your refinance than if you're credit score is in the 700+ range. Since the year 2006, you can also get the new Vantage credit score. In this system,scores range from 501 to 990. The lowest range is 501 - 600, which will get you a Vantage rating of 'F'.Because of the problems in the sub-prime mortgage market, the market has tightened up substantially since 2006. Interest rates have gone down substantially due to governments action.In addition to your credit score, there are two terms you'll want to be familiar when trying to get any mortgage, but they will really affect your rate if you are trying to refinance with bad credit. Both are actually ratios. These are Loan To Value (LTV) and Debt to Income ratios. Loan to value is the amount of the loan you're trying to get as a percentage of the value of your home. Naturally, the less you are trying to borrow, and the more equity you have in your home, the lower the risk for the lender. Debt to income is exactly what it sounds like. That is your debt load as a percentage of your verifiable income. Once again, a more favorable ratio from the lender's perspective is more income and less outstanding debt.

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