The Sub Primes Crisis and Bad Credit Mortgage Refinancing…
Is there Still Bad Credit Mortgage Refinancing Available?
It is almost common knowledge that our current recession was started because of sub prime mortgages, this is making many homeowners wonder if there are still mortgage refinancing options if they have bad credit. The short and simple answer is, yes. They are still options for individuals with bad credit to refinance their loan, but it has changed from the past. The bad credit mortgage refinancing options that are available to clients these days are not as easy as they used to be to get a loan approved.
The days of bad credit mortgage refinancing with a sub 600 credit score are long gone. Also the days of not being able to show tax returns to prove the listed income and still being able to get bad credit mortgage refinancing on a loan is also gone. To qualify for a bad credit mortgage refinancing loan the borrower will need to have at least a 620 credit score. With a 620 credit score a borrower is able to qualify for an FHA mortgage refinancing program. This is the only way that anyone in the market can get bad credit mortgage refinancing for a loan. Unless they want to consider hard money lending, the rates for these types of loans are over 10%.
An individual that qualifies for the bad credit mortgage refinancing loan will have to fit into all of the guidelines that are set by the FHA. The FHA does not lend this money. They set the guidelines and private mortgage companies all around the country lend the money out, if they follow these lending guidelines the FHA will insure this money if the loan gets defaulted on, so for many of these lenders it is a no lose deal.
With an FHA loan, a borrower can refinance up to 97% of the value of the home. If they are taking cash out during the refinance they are only allowed to go up to 95% of the value of the home. The homeowner will also have to be able to prove that the listed income is real by showing the past two years of tax returns. Also the FHA has their own list of appraisers that are able to appraise the value of the home. They will have to do this to ensure that the home is worth the correct amount so that the lender can lend on the property. For many homeowners in this market this is very difficult.
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