Is home refinancing with poor credit possible? A refinance is getting popular among homeowners. But there are several things to consider before you apply. It is important to carefully consider your reasons why you will get a refinance. It is also important to know if it is possible if you have poor credit, or bad credit.
You have to admit the fact that times are hard nowadays. You may have incurred numerous debts that you can not pay anymore. Because of this, you could face the prospect of foreclosure and may eventually lose your home. Here is a closer look on refinance that will help you determine if it is a good option for you. Remember, people can refinance to take money out of a home, or to consolidate debt. But if you think you cannot pay, then a home refinance may not be for you.
Also consider that it costs money to refinance a home. When the housing bubble was at it’s peak, there was so much appreciation, that people just rolled teh cost of the refinance into the refinance. Today, your home may not be worth the same that is was when you got the original loan.
In other words, you may be upside down on your loan. If so, a home refinance may not be available to you, whether you have bad credit or not.
Why You Need to Get a Refinance
There are times when you need a refinance not because you are deep in debt. You can use this option to make renovations and improvements for your home. Home improvement is costly and you may need additional financing to start the project.
In the past, you will probably get a personal loan for home repairs and house improvement projects. Another option open for you is to use your credit card to borrow the money you need. This is a common practice especially for people who are enjoying a higher credit limit.
Unfortunately, these options may not be applicable today. Because if the present economic crisis, more and more people are finding it very difficult to get a personal loan. Most banks today often refuse such application due to uncertainty in the credit market.
That is why a refinance can be a good option today to get the money you need. There are plenty of good deals nowadays that will enable you to pay less interest than the original mortgage. However, if you want to refinance your home for a loan and you still have an existing mortgage, then you are required to pay back the first mortgage.
Why You Should Not Get a Refinance
A refinance is good option for improving your home to increase its value. However, you must not use a refinance haphazardly. You must ensure that you will not pay more on the refinance deal than on the first mortgage.
It is also very important to note that a refinance is secured against your home. So if you fail to pay the loan, then the lender could foreclose your home.
Paying credit card debts should not be a reason to get a refinance. This is sheer foolishness because you are paying off an unsecured personal debt and staking your home for it. You can not stop a foreclosure if you fail to pay off the refinance. An unsecured personal debt can be managed through other means without putting your home at risk.
Always remember that a refinance is perfect option to improve your home so you can increase its value. Use this loan wisely to avoid problems in the future.
Lending companies will surely pull your credit history if you apply for refinance. A bad credit could significantly affect your chances of getting an approval. At the very least, you will shoulder a higher interest rate if your credit is unsatisfactory.