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Refinance with Bad Credit - The Bills.com Blog
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Refinance with Bad Credit
Question: I'm trying tp refinance with bad credit. I have some 30day marks with in the last year and my middle credit score is 606. I'm thinking about refinancing with a lender whose offering me 8.25% fixed 30 yr with 80% LTV is this good. it was the best interest rate I received after speaking to several lenders but the LTV is short of other offers. How does LTVwork?
Answer: This is a decent offer given your somewhat tarnished credit history. Because of your low credit score, I encourage you to be very careful about a “ bait and switch.”
As with all major financial decisions, I HIGHLY recommend getting competing quotes... don't take the first offer... take the BEST offer. Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at:
Free Refinance Quote
I have also cc'd a mortgage lender that Bills.com trusts greatly, and maybe he can tell you if he can beat 8.25% at 80% LTV (loan-to-value) for a FICO of 606.
I’ve heard stories of lenders and brokers enticing borrowers to the closing table with great loan terms, only to up the interest rate by several percentage points on the day of closing. Many people in that situation go ahead and sign the less favorable loan because they feel trapped, and don’t understand what a huge difference
2% will make in their mortgage payments each month. I only point this out to you so that if something like that happens to you, you will know to walk away from the loan and take your business elsewhere. I doubt that this loan falls into that category, because the loan terms are not unbelievably good, but I think that this may be one of the better fixed-rate loans available given your credit history.
LTV, which is an acronym for “loan to value ratio,” indicates what percentage of your home’s value your new loan will encompass. For example, if you own a home worth $100,000, and you refinance at 80% LTV, your refinance loan will be for $80,000, or 80% of your home’s value, leaving you with $20,000 in equity. The higher the LTV of a loan, the more risk a lender is taking in offering you the loan, as the lender stands to lose more money if you default. Because of the higher risk, the higher the interest rate you will likely to pay, which is probably why the lowest interest offer you have received is on the loan with the lowest LTV. Your
decision about which loan to take will likely hinge on how much cash you need to pull out of your home, if any, at the time of the refinance. If you need a lot of cash out, you will probably need to go with one of the higher interest, higher LTV loans, as those will offer access to more of your equity. However, if you need little or no cash-out, and are simply looking to obtain a better loan, go with the lowest LTV possible to cover your current loan.
To learn more about refinance loans, I encourage you to visit the Bills.com Refinance Resources page at http://www.bills.com/home-refinance/
You can also enter your contact information into the Bills.com Savings center at the top of the page, and I can have several pre-screened brokers contact you to discuss the loan terms they can offer.
Best of luck finding a loan that fits you needs. I hope this information helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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