Home Loan Refinancing Options for Individuals with Bad Credit

Over the past few years, many Americans have refinanced their home loans to take advantage of the low interest rates. But, the low rates are not offered to all homeowners. Currently, the 30 year fixed interest rate is around 4.35%. This is only available to borrowers with good credit. Those with poor credit standing are usually given higher rates than the average.

People with bad credit who are seeking a refinance loan from Bank of America or Countywide must know that they need a credit score of at least 740 to qualify for the 30 year fixed interest rate of 4.5% or below. Moreover, their debt to income ratio must fall below 40% in order to be qualified for this refinance rate.

Sadly, the reality is, these are very difficult requirements to meet for people with poor credit. However, if they are determined to take advantage of good rates, they must try to boost their score by paying down their debts especially the ones incurring high interests. These include credit cards, payday loans and personal loans.

Moreover, even if Bank of America is considered as one of the country’s major financial institution, the low rates are not only exclusive to them. It is a common misconception of Americans with bad credit that not many lenders would want to work with them. In fact, there are plenty of institutions that are looking for customers and would welcome anyone regardless of his or her credit standing.

The website of FDIC provides a list of the mortgage lenders who can help in refinancing a home loan no matter what the status of the borrower’s credit is. There are about 7000 financial institutions all over the country with FDIC insurance that can provide assistance in home loan refinancing with the lowest mortgage rates of interest.

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Obtaining a mortgage with bad credit

Obtaining a mortgage with bad credit these days is almost impossible. Because of the poor economy, and the problems the United States experienced during the credit crunch and the housing bubble bursting, banks and lending institutions are wary of lending money to anyone that has less than stellar credit.

If you have bad credit, and are wanting to get a mortgage to buy a house, one of the first things you should condider doing is getting your credit report. Once a year you can get your credit report for free from freecreditreport.com

When you have this, you can find out what is causing your credit to be bad. There may also

be mistakes on the credit report and you can get t hem fixed. By doing this, you can effectively raise your credit score.

A few things you want to do is pay off your debt. Right now, lending institutions are lending for people that have a low debt to income ratio. That means that you have to be making more than you are spending monthly.

Take a look at your spending habits and see if you are able to have enough left over to pay a mortgage payment, and have some left over.

In general, you should be planning on spending no more than 25-30% of your monthly income on a mortgage.

If you can’t do that, you may want to reconsider trying for a mortgage loan.

One of the things I like to suggest to people is to work on improving your credit score and save money at the same time. If you do this, you will have good credit when you buy your home, and will have the money saved.

Expect to have 20-25% of the purchase price of the home ready to make a down payment.

Also note that the better your credit score is, the lower interest rate you will qualify fo

r on the mortgage. This can save you hundreds of dollars monthly. Small changes to the interest make huge impact on the paymnets.

Ask yourself this…. do you really want to add more debt to your burded if you have bad credit? Why are you looking for very bad credit loans?

Ask youself how and why you got in this position in the first place. If you have made changes and made adjustments to your life style then good for you!

But remember, part of the credit reporting system is that your report is a snapshot in time. It is always moving and changing. And, part of the reason things tend to stay on a report for years is it takes time to change.

You want to show that you have sustained change to financial institutions.

So, before going out to see about obtaining a mortgage with bad credit, think about whether or not it really makes sense.

Here is a chart showing some things that are looked at when considering credit score and your ability to obtain a mortgage with bad credit.

Image via Wikipedia

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Mortgage loans for people with bad credit

Military loans for people with bad credit

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Getting a bad credit loan is one of the options of people who cannot obtain a personal loan in their times of need. A poor credit history is the main reason why people cannot take out a traditional loan. Banks and other traditional lenders do not want to run the risk of approving a loan for borrowers with a history of poor payments. With a bad credit history, an application for cash advance will be denied.

When one seeks a loan from a bank, collateral is usually required. This can be in the form of any valuable and tangible asset that can replace the value of the loan once it is unpaid. But, money advance is one of the types of loan that do not need collateral. The application is easy and the approval is quick. A money advance loan is deposited in the same day the loan is approved.

In the application process, there are certain requirements for the applicant to be eligible. The applicant must be at least 18 years of age and a legal citizen. Also, the applicant must show residency for at least three months in the city or state where the application was submitted. An existing checking account that has been valid for at least three months is also needed. There are other lenders that will request the loan to be paid using an automatic checking account withdrawal on specified dates. Any late payments may incur charges to be added to the principle loan amount.

Bad credit loan is an alternative for people with poor credit standing. This is especially helpful in emergency situations such as car repair, job loss and medical expenses. The main advantage of this type of loan is that it does not consider the credit score as a factor. Moreover, it does not require any form of collateral. Finally, it is a loan that can be easily applied for and can be quickly approved.

You can get the car that you have always dreamed of by getting a car loan from any bank. However, this is only possible if you have a good credit rating. Obtaining a car loan with bad credit can be difficult but it is not impossible.

There are many lenders who can give a car loan for individuals with bad credit rating. The important thing is to determine one’s credit score before applying for a loan. Credit scores range from 350 to 850. A score below 580 is considered poor. While the score decreases, the chances of obtaining a loan decrease. Thus, if you plan to take a loan, you have to know your current credit score to be able to determine the probability of getting an approval.

Aside from knowing your score, it is also important to know the amount of down payment you can make to get a loan approval. Paying an initial amount reduces the loan’s interest rate. Oftentimes, the amount of down payment is dependent on your credit score. The average percentage is usually 20% to 50% of the total loan amount.

There are other preparations that can be done before getting a bad credit auto loan. These include reviewing your credit report annually to be able to clean up your credit standing the soonest possible time. Another is to make timely payments of bills. The most important is to obtain a good credit standing. All these will impact the interest rates of an auto loan by significantly reducing it.

There is no assurance for approval when getting a bad credit auto loan. If you are rejected, do not worry. You can always look for other lenders that can give you a loan despite your credit standing. Lenders for people with bad credit standing can be found online. They can even give low down payment and low interest rates for auto loans despite the poor credit standing.

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Rob McCord, Pennsylvania State Treasurer is continuously admiring a payday loan program of a credit union. This program has been reported to save its members worth $15 million.

The $125 million Cross Valley Federal Credit Union was visited by Rob McCord to find out about its Credit Union Better Choice program. According to the Treasury Department of Pennsylvania, this program was said to have given assistance to three women who were faced with unexpected expenses. This Wilkes-Barre, Pa.- based credit union has been reported to have issued around 280 Better Choice payday loans to about 101 of its members since the year 2007.

Better Choice Payday loan was launched in 2006 through a joint venture between Pennsylvania Credit Union Association and the state. Since then, the participating credit unions was said to have made about 43,000 Better Choice loans that amounted to a total of $20.5 million.

Officials said that the loans have given its members a total savings that amounted to $15 million. This cost includes fees especially interest charges that goes with most payday lending products. Better Choice Payday Loan is available at about 79 credit unions in almost 222 Pennsylvania locations.

Mc Cord said that the Better Choice Program is especially designed for people who seek payday lenders because of economic struggles that lead to difficulties in making ends meet. He adds that this program is a better option for these people.

The President and Chief Executive officer of Cross Valley FCU, Edward Kaushas, said that the decision to offer the loan came easily. Their company is happy to know that the program is able to reach out to many people and make a big impact in their lives and in their families.

The typical charge for a $500 payday loan is about $15 for every $100 that is borrowed in a two week period. For a 90-day period, the fees for the same loan will reach about $450. However, in the Better Choice program, the cost of this type of loan for a 90 day period is about $42.50. By the end of the loan period, the borrowers save about $50.

Mc Cord highly spoke about the Better Choice payday loan program. He said that this helps Pennsylvanians expand their dollars for emergency needs without falling into bad debt that most traditional lenders may create.

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