Refinancing a home mortgage could yield a treasure trove of benefits. For example, you could enjoy a lower interest that equates to tens of thousands of dollars or more in savings over the life of the loan. You may set up a lower monthly payment or take cash out of your home’s equity. Unfortunately, some homeowners who would benefit from a refinance have been sitting on the sidelines for the same reason. They believe that they would not qualify because of their bad credit history. If you are in the group, the good news is that your assumption may be wrong.
Generally, many lenders want you to have a credit score of 620 or higher. What can you do if your credit score is below this threshold? In some cases, lenders will allow you to take on a co-applicant even if that individual does not live in the home with you. If you have an FHA loan, another option is to apply for an FHA Streamline refinance loan. If you meet other qualifying requirements, you may be approved for an FHA Streamline loan without an income verification or a credit check. Do you plan to use some of your cash-out equity to pay off a few debts? This may improve your debt-to-income ratio and your credit score. While you may still need at least a 620 minimum credit score to qualify, this could allow you potentially qualify for better loan terms.
Are you wondering if you need to improve your credit score before you apply for a refinance? Our loan team at MortgageDepot is available to support you through your full refinance experience. To inquire about the options available to you today, reach out to us online or by phone.
Contact one of our loan consultants to learn more.