A mortgage refinance to fix poor credit (bad credit score) can be challenging but it may still be possible. Credit requirements vary by lender and borrowed amount believe it or not. The less you borrow against the property the better the chances are if your score is below 500.
There are a few solutions to help you refinance with a lower credit score. Credit is one of the best tools we have access to in Canada and we can damage it quickly. We’ll review options on how to refinance and ways to improve your credit and cash flow.
How to refinance my mortgage with poor credit?
A cash-out refinance is a mortgage that replaces your current mortgage with new terms, a new interest rate, and an updated balance. The new mortgage will help to pay off the current balance owed. Upon approval, you can be eligible for up to as much as 80% of your property’s value.
Your credit score dictates which lenders are willing to give you a loan against your property. Your bank or credit you normally look for a fico score of 680 or higher to entertain your application.
The idea is to find a lender that works with people who have bruised credit. A mortgage broker can help you navigate through alternative lender options that are less advertised than your bank.
What do I need to get approved with poor credit?
The nice thing is you can still benefit from a competitive interest rate with bad credit. There are several institutional lenders that share the same approach as your credit union or bank but accept lower credit scores.
Sub-prime lenders are a great alternative to ensure you can get back up on your feet financially. A sub-prime b lender requires most of the same income documentation as your bank. Terms generally range from 1-3 years giving you the opportunity to repair any damage to your credit.
The next option to help aid in your troubles would be a private mortgage lender. This is a much easier route to getting approved for a mortgage when you have poor credit. Often a lender’s decision will be based on your property and not your credit or income.
Ways to improve my credit after a refinance
Payment reminders:
With technology where it’s today there are so many ways to set reminders in place to make the minimum monthly payment amount before its due date. Setting up a routine so that you don’t miss those monthly payments is a key step in the right direction.
Dispute what you owe:
It can be easy to have things unravel at the seams when it comes to your household monthly spending. In most cases, if you owe a creditor it is very tough to have much of what you owe forgiven (talk to us before you go down this road). Nonetheless, sometimes there are ways to dispute what you owe and have the balances reduced.
Keep records:
Record keeping is an important tool to help manage your credit facilities and stay organized. Much like setting payment reminders, it helps you stay on top of a high debt load without spiraling out of control. Whether you function better with technology or paper trail, have a database of records.
Consolidate:
Debt is debt no matter which way you slice it, this we can all agree on. Having the means to house your debt under 1 to 2 vehicles makes a difference. Carrying 4 credit cards, 1 line of credit, a car loan (sometimes two depending on your household), and oh that thing called a “mortgage” can be very cumbersome. If you have equity in your home, consider getting rid of those nagging monthly bills and reducing everything to one payment. Get rid of annual fee credit products because they are just costing you money.
Take the time to go over your finances as often as you can, and it will make the world of difference in your budget.
Improve your credit score
Minimum credit score requirements vary by lender and type of mortgage. If your credit score is below the bank minimum of 680 you can still get a mortgage with bad credit. There are several .lenders in the market that we can work with for a home loan refinance
By electing to refinance your mortgage early you can use the money to consolidate debts and repair your credit history. Credit reporting is relied upon by many mortgage lenders today. It shows how you manage the credit limits awarded to you.
Looking to get approved for a refinance, call us at 1-855-242-7732 or apply online now.
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