Mortgage Project

Refinancing your mortgage is an effective way to rebuild your credit, particularly if you have recently declared bankruptcy or otherwise have bad credit. With more relaxed underwriting standards, you may be able to get a home equity loan through a sub prime lender, sometimes known as “damaged credit” specialists, as early as six months after your bankruptcy discharge.Mortgage lenders classify borrowers into the following credit categories based upon their credit scores. These categories may vary slightly among lenders. Sub prime lenders offer B, C, and D credit, which means they offer credit to high-risk borrowers. For taking on these high-risk loans, sub prime lenders charge somewhat higher interest rates and fees.

Credit Rating Credit Score

A+ 700
A 670
A- 640
B 620
C 580
D 550
E 520

Credit card provider Providian Financial estimated that consumers with an average score would reduce card finance charges by $76 annually if they raised their score by 30 points. Mortgage refinancing through sub prime debt consolidation loans alone can help raise your FICO credit scores by at least 30 points, especially if you are diligent about keeping up with the monthly payments. If you refinance now to combine a second mortgage (home equity loan or line of credit) into a new 1st mortgage loan while cashing out on equity to consolidate reaffirmed credit card debts and other loans you may have, you save a lot of money. With the new minimum monthly payments being implemented by credit card companies, the savings could be even greater if you refinance now.

Paying down debt and making regular, on-time monthly payments are the fastest ways to re-establish good credit. Fair Isaac & Co. states that paying down your credit card balances by just 34% could raise your scores by almost 20 point, and paying your bills on time for 6 months could raise your FICO scores almost another 20 points. So, after making your payments on time each month for about 2 years, your FICO credit score should be well above the sub prime rateanything over 620 is considered above sub prime. Then, you could refinance again for a much lower interest rate.

Now is the time to take action and start rebuilding your credit. You can still refinance for a rate much lower than what you pay in credit card and other loan interest rates. And, you may be able to claim up to a 100% tax deduction on the interest you pay.

Maria Ny is a respected free-lance writer from San Diego, California. She has written many articles that covered a broad range of subjects ranging from Bankruptcy Reform, Credit Repair to Subordinate Financing. Check out her informative articles online at Home Equity Loans Nationwide. Learn more about credit score requirements and get additional information including an accurate interest rate quote for debt consolidation loans. We suggest you get more information and learn more about the guidelines for a Bad Credit Second Mortgage that could save you money by reducing your monthly payments.

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Bad credit loan mortgages or non-status mortgages are purposely intended to serve people with a bad credit history. According to a recent survey, one fifth of all adults are not able to qualify for a standard mortgage as a result of a previous or current bad financial situation.

Credit history is based on information retrieved from sources including Public records such as electoral roll information, court judgments and bankruptcies; and Information provided by financial institutions and other lenders such as banks that provide credit accounts and lending facilities.

In order to calculate the potential risk in providing loans to the person, most lenders use independent credit reference agencies to gather and assemble this information since they are permitted by law to review a mortgagee’s credit report before granting approval.

Bad credit rating usually results from failure to pay off outstanding debts or other credit payments on time, due to factors such as outstanding rent or mortgage arrears, county court judgments (CCJ) or bankruptcy. There are also other reasons that can result in a bad credit record which include:

1. Foreclosure

2. Heavy medical bills

3. Settlements arising due to Judgments /divorce

4. Multiple credit cards

5. IRS debt

Bad credit mortgage is designed for people who are unable to take out a mortgage from high-end mortgage providers. However, there are several providers who are willing to take a risk and provide loans for individuals with bad credit ratings, but at a higher rate or lower maximum amount.

Normally, a bad credit mortgage loan has an introductory interest rate that is fixed for 2-3 years, which is substantially higher that the rate pertaining to a conventional 30 year fixed rate loan. This is due to the extra risk the lender has to take, because with a bad credit, the borrower’s probability of default on the home load is higher than someone with good credit. However, after the initial period, the interest rate on a bad credit mortgage will adjust periodically.

There are also a few factors that most lenders of bad credit loan mortgages will look into, before granting the loan mortgage to people with bad credit history. This includes:

1. Employment history and income stability

2. Current monthly debt
3. Value of the property and
4. Down payment

Since loan requests from people with bad credit do not fit under the standard underwriting guidelines, fees charged by lenders on bad credit mortgage loans are also significantly higher than those charged in a conventional or standard home loan. This can range from 1% to 6% of the total loan amount.

Since individuals who get a bad credit mortgage usually do so mainly because they want to put their credit back into good standing, or as an opportunity to clean up credit history, the higher interest rate need not necessarily lasts for 30 years. Additionally, if the monthly loan payments are in time for two consecutive years, the bad credit mortgage can be refinanced with a conventional loan at a much lower interest rate.

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http://badcredit-hq.com/
Helping you to get your finances back under control

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Homeowners run into financial trouble all the time and with a mortgage loan to pay, it can become a stressful situation. So what happens to the homeowners out there who have bad credit? Are they able to get help?

Just because your credit is bad does not mean that you are helpless. It is possible to get 100 percent mortgage financing with bad credit. The best part is that it’s almost as easy as if your credit was spotless! There are many lenders out there who will offer 100 percent mortgage loans. If you are fortunate enough, you can find lenders who will give 103 percent mortgage loans so you can cover your closing costs.

There are a few different choices you have when trying to obtain one of these types of mortgage loans. A huge advantage with getting these loans is that you can get a home with a small downpayment, or even no downpayment at all. While this is a benefit to anyone buying a home, it’s even more of a help to someone with bad credit. Just owning a home will help you out with credit if your payments are on time, plus you build equity while living in the home.

Through most lenders and circumstances, you probably won’t have to pay for any type of private mortgage insurance. This insurance is really a protection for the lender. So if you had to pay this, you would be spending a lot of money on something that does not protect you.

When getting this mortgage loan, you can get an 80/20 arrangement. This means that you will take out one mortgage for 80 percent of the home. Then you will take out a second mortgage loan for the remaining 20 percent of the value. Occasionally you will find a lender that will finance your entire home value with a single mortgage. This is ideal as you will be paying less money in the long run.

Why isn’t everyone doing this? Chances are, if you get this type of loan, you have higher interest rates. You also have to pay closing costs and any fees that are applicable from the lender. Don’t forget that you are also purchasing a home with no equity. Prices of real estate constantly go up and down, and if they drop, there is a chance you might owe more than the value of your home.

So if your credit score is low but you are looking for a mortgage, there is hope at the end of the tunnel. A few quick searches online will give you some lenders to choose from. Make sure to research them all before making a decision. Always ask as many questions as possible to ensure that all of your needs and interests are being met.

Please visit the author’s website for more information on Bad Credit Mortgage Loans and other financial information.

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