Refinancing Options for Homeowners with Bad Credit Scores

approved mortgage application document with house model and keyMost people would not make their home ownership a reality without a mortgage. Mortgages are long-term loans, and you might undergo various changes over its life. To get a loan that fits into your lifestyle or meets some form of financial obligation, a mortgage refinance is the ideal option.

Refinancing a mortgage might not be as easy for homeowners with a poor credit rating. There are, however, still bad credit refinance loan options for residents with a poor credit score, says American Loans. Here are some of these options:

FHA Streamline Refinance

This is the ideal option for those with an FHA loan. FHA loans will allow you to refinance with a poor credit score and without getting an appraisal. Most lenders will refinance your loan with a FICO score of 620, and some accept even lower ratings. To qualify for FHA streamline refinance, your mortgage payments should be current, you must have owned your house for at least six months, and you should be FHA-approved.

HARP 2.0 Loans

HARP or Home Affordable Refinance Program is available for homeowners with a conventional Freddie Mac or Fannie Mac loan. To qualify for a HARP 2.0 loan, lenders need a credit score of 620 though others can accept lower scores. You must have been on time with all your repayments for the past six months and be employed with a verifiable income to get a HARP 2.0 loan.

VA Refinance Loans

These are designed for those with an existing VA loan. Military members and veterans with a conventional loan wishing to change to a VA loan are also eligible. Since a VA refinance loan is federal-backed, poor credit scores are not an issue.

From the above options, there is no reason why a poor credit score should stop your refinancing. Your lender will still give you competitive rates despite the poor rating. Take advantage of your options today and enjoy the benefits of a mortgage refinance.