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Less than Perfect Credit Refinance
What you need to know during your refinance
Since 2000, the mortgage industry has come up with some great products to help those with less than perfect credit so that they can refinance or purchase a home. There are risks to these loans and most are short to medium term solutions. They’re designed to help someone with less than perfect credit start “fresh” and possibly consolidate their bills into a lower monthly payment.
California Home Loan Tip: When trying to decide if you should complete a California Refinance or not, evaluate your short, medium and long term financial goals and figure out how a refinance might help. Talking with your Mortgage Consultant is an important step to deciding if this is something you should move forward with and what type of home loan is best for your situation.
When a homeowner can consolidate all their bills into one payment and save $300.00 dollars or more a month, there is a lot of benefit the homeowner is getting. However, these loans risky in that they could (if not fixed for 30 years) adjust to a much higher payment down the road. It is important to understand that these loans will have to be refinanced at a later time (if not fixed) when the rate adjusts and that needs to be taken into consideration when obtaining this type of loan.
One key point that needs to be address is how someone gets into a situation like this. One way is that it was beyond their control, ie. divorce, injury, laid off from work…etc. Another way is not managing money well. It is important to not extend yourself, not take on too much debt and have a 3-6 months worth of savings in case something happens. If you do fall into the a less than perfect credit situation, it is better to act quickly then take a wait and see attitude. I had one potential apply 3 times with me and each time his credit and situation was worse. It did get to the point that he no longer could obtain a new loan and was in potential of loosing multiple properties. If he did obtain the loan, he could of paid off his creditors, consolidated most of his debts and saved nearly $1,800.00 per month. Each time he decided not to move forward because he did not like the interest rate because he was used to A paper rates. The fact is, less than perfect credit interest rates are higher than if you have perfect credit. Sometime a lot higher and that is a tough pill to swallow. But the reality is when you make late payments, lenders are going to charge these higher rates because they are more risky loans. If you can save a good amount of money every month, consolidate your bills and get a fresh start they might be a solution for you.
Kevin O’Connor
Mortgage Consultant
800.550.5538
www.koloans.com
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