A Sub-prime Loan Should Be a
Short Term Solution, not a
Long Term Lifestyle
Short Term Solution, not a
Long Term Lifestyle
Refinancing a Sub-Prime or Bad Credit Mortgage
Things to Consider
Unlike borrowers who often
want the safety of a rate fixed for
a long period of time, those with
credit problems should not plan
on keeping their bad credit
mortgage for an extended period
of time. A rate fixed for two years
should be sufficient to allow you
to clean up your credit and save
some money.
Once you are on better financial
footing, and have raised your
credit score, improved your
income, or increased your
equity, you may qualify for a loan
with better terms.
want the safety of a rate fixed for
a long period of time, those with
credit problems should not plan
on keeping their bad credit
mortgage for an extended period
of time. A rate fixed for two years
should be sufficient to allow you
to clean up your credit and save
some money.
Once you are on better financial
footing, and have raised your
credit score, improved your
income, or increased your
equity, you may qualify for a loan
with better terms.
Refinancing a Sub-Prime or
Bad Credit Mortgage
If you have credit problems your requirements are different from
regular borrowers. You need a shorter term loan while you improve
your credit picture. Because these kinds of loans are underwritten
and priced on a case-by-case basis, you will need to contact
several lenders and see what kind of programs are available to you.
A 2/28 mortgage is fixed for 2 years, which can give you a chance to
rebuild your credit and then refinance to an A-rated loan. Other
programs offer rates that drop as you create good credit by making
your payments on time. If you think you might have progressed from
being a sub-prime borrower to an A-rated borrower, or have
amassed lots of equity in your home, check with some lenders and
see how they rate you - you may be ready for an A-rated loan.
An FHA refinance may also be an option for you. The guidelines are
not as hard and fast as those of other lenders. If you are at least two
years out from a bankruptcy discharge date, and have successfully
made your mortgage payments on time for at least 12 months (no
more than 30 days late), you could be considered for an FHA
refinance.
Bad Credit Mortgage
If you have credit problems your requirements are different from
regular borrowers. You need a shorter term loan while you improve
your credit picture. Because these kinds of loans are underwritten
and priced on a case-by-case basis, you will need to contact
several lenders and see what kind of programs are available to you.
A 2/28 mortgage is fixed for 2 years, which can give you a chance to
rebuild your credit and then refinance to an A-rated loan. Other
programs offer rates that drop as you create good credit by making
your payments on time. If you think you might have progressed from
being a sub-prime borrower to an A-rated borrower, or have
amassed lots of equity in your home, check with some lenders and
see how they rate you - you may be ready for an A-rated loan.
An FHA refinance may also be an option for you. The guidelines are
not as hard and fast as those of other lenders. If you are at least two
years out from a bankruptcy discharge date, and have successfully
made your mortgage payments on time for at least 12 months (no
more than 30 days late), you could be considered for an FHA
refinance.
Sub-Prime Borrowing