What to Ask Your Mortgage Broker About Refinancing with Bad Credit
Refinancing a mortgage allows homeowners to lower their monthly payments while taking advantage of lower interest rates. But for those with poor credit, getting approved for refinancing can be a challenge. Here are three questions to ask your mortgage broker about refinancing a mortgage with bad credit.
How Do I Apply for Refinancing?
Regardless of your credit history, the process of applying for mortgage refinancing is the same. Typically, you'll need to have at least 20 percent equity in your home to qualify for a refinance. You'll also need to provide the bank or lender copies of documents that will be used to determine your ability to repay the loan -- such as past tax returns, pay stubs, a list of assets and debts, and other financial records. Your mortgage broker can tell you which specific documents lenders will need in order to assess your application.
Is Refinancing a Mortgage with Bad Credit Possible?
While refinancing a mortgage with bad credit isn't the most ideal of circumstances, it can be done. But you'll likely pay a higher interest rate than you would with unblemished credit, which can defeat the purpose of refinancing to lower your monthly payments. Your mortgage broker will help you assess your current financial situation and determine whether refinancing makes sense for you.
Does My Credit Score Matter When Refinancing a Mortgage with Bad Credit?
One of the prime factors that lenders will use when determining your ability to pay is your credit history. The higher your credit score, the better your chances of being approved for financing and the lower interest rate you'll receive. If your credit score is low or your have a less-than-perfect credit history, there may still be some options available to you for refinancing. Ask your mortgage broker to review your credit history with you. It may be that paying down some of your existing debt or fixing an error on your credit report is all you'll need to do to qualify for refinancing mortgage with bad credit.
Considering refinancing but have a less-than-stellar credit history? We can help. Contact us at our Edmonton office to discuss your options for refinancing a mortgage with bad credit.