Oct 05 2021

Can I Refinance Without Perfect Credit?

Interested in refinancing but concerned you might have bad credit? First, don’t worry – we offer many mortgage loan problems that don’t require perfect credit to qualify.

Interested in refinancing but concerned you might have bad credit? First, don’t worry – we offer many mortgage loan problems that don’t require perfect credit to qualify. It may very well be possible to refinance your mortgage even if you have a few blemishes on your credit history.

Why Refinance?

Refinancing your existing home loan can be an excellent way to move closer to your financial goals. Some of the common reasons homeowners refinance include:

  • To lower their monthly mortgage payment.
  • To lower their interest rate.
  • To move from an adjustable rate loan to the security of a fixed rate mortgage.
  • To pay off their home sooner with a shorter term loan.
  • To lower monthly expenses with a longer term loan.
  • To take cash out for home repairs or renovations.
  • To consolidate a second mortgage or home equity loan and a first mortgage loan.
  • To take cash out for other, non-home related purposes.

Wondering what you could save by refinancing? Call now to check today’s rates.

How Does Credit Impact Qualification?

Credit history is just one of many factors that go into qualifying for a mortgage. Each home loan program has specific requirements that must be met, which may include things such as the amount of equity in the home, the percentage of monthly income that can be allocated towards mortgage expenses, the types of properties that can be financed, whether the home can be used as an investment property or vacation house, and more.

Credit requirements often come into play as a minimum qualifying credit score, and specific events in the credit history that could disqualify a homeowner from a particular program. For example, there may be a limit to the number of late payments shown on the credit report within the past year. These are often broken down into the number of late payments allowed that were 30 days past due, 60 days past due, 90 days past due, and 120 days past due, with the later payments having a more negative impact. A late mortgage payment will generally be more of an issue than a late payment on another bill when it comes to qualifying for a refinance.

Some of the other credit events that could impact eligibility for a specific program are:

  • Bankruptcy
  • Foreclosure
  • Short Sale
  • Mortgage Loan Modification
  • Deed In Lieu
  • Pre-Foreclosure
  • Judgments
  • Tax Liens
  • Collections
  • Charge-Offs

The more time has passed since the credit event in question, the less of an impact it may have. In some cases, a bankruptcy one year ago may make you ineligible for a certain program, but a bankruptcy 10 years ago could present no problem.

Credit history and score are not only factors in determining whether an applicant qualifies for a home loan, but may also impact the terms they are eligible for. Some programs allow homeowners with excellent credit to borrower a greater percentage of the subject property’s value, and restrict the amount that can be borrowed to a lower percentage for those with lower credit scores.

Not sure what your credit history looks like? Call to speak with one of our refinancing experts to review your report and discuss mortgage options.

Why Is My Credit Score & Credit History Important?

When homeowners don’t make their monthly payments on time, or worse, go through foreclosure or bankruptcy, it can be very costly for the mortgage lender. As part of the home loan application and approval process, the lender is working to determine whether the applicant is likely to be successful in re-paying the loan over time.

Credit score and credit history are important pieces of information that go into this determination, as how consumers have used credit and loans in the past is often a good predictor of how they will handle new credit accounts and loans in the future.

What If I Don’t Qualify?

If during a consultation with a mortgage loan originator you learn that you may not be eligible for a specific program due to your credit, don’t worry. This alone does not mean you won’t be able to refinance. Here are a few steps you can take:

  1. Check the accuracy of your credit report.
    It’s not uncommon for there to be mistakes on a credit report. There could be late payments showing up for accounts that you’ve always paid on time, or even credit accounts that aren’t yours. This is often seen with common names, or family members with the same or very similar names. Go through your report carefully and address any errors you come across.
  2. Consider alternate loan programs.
    Each mortgage program has its own set of requirements. If you are ineligible for one product there may be another with less restrictive guidelines that you may qualify for.
    Talk to your loan originator to discuss the options.
  3. Work to improve your credit and reapply.
    If you don’t qualify for any refinance programs at the moment that are a great fit for your scenario, you may want to take some time to work on improving your credit and reapply when your scores are higher, or some negative credit events are further in the past. Focus on paying every bill on time, every month. Work on paying down balances on credit cards, auto loans, or other loans, concentrating on the debts with the highest interest rates first.

Through this process you may come across credit repair services promising a quick fix. Do your research and watch out for disreputable organizations that could do more harm than good.

Do you have questions about your credit score, credit history, or refinancing in general? Call today – we’re here to help!

These days, more and more people are looking to buy their dream homes, especially as remote work and work-from-home setups have become an enduring trend. A 15 point increase in requests for home tours and other home-buying services, along with a 11% rise in Google searches for homes, indicate an uptick in demand to buy houses in the country. However, there is a definite worry about affordability when it comes to housing, especially as hefty price tags on available residences have kept the market just as competitive as before, if not more.

According to the latest reports from analysts, it’s not all bad for existing homebuyers and aspiring house hunters. As previous data shows, timing matters in the housing market, and working on different approaches to home buying – like through a reliable lender – can help advance you towards more affordable housing goals. Below, we discuss whether house hunters should buy now or wait, and why.


What is your financial situation?

Counter to the rise in home demand, there is a considerable lack of supply. Along with rising prices and interest rates, the housing market may seem like a highly competitive space with wealthy homeowners fighting for what little property is left. It can be overwhelming, but knowing where you stand financially can help you better strategize your home buying journey. Following the four key components of affordability, ask yourself:

  • How much do you have saved for a down payment?

  • How much does your household earn?

  • What debts do you carry?

  • What is your credit score?


Familiarizing yourself with these components will help inform your decision on whether or not to wait. For example, taking the time to improve your credit scores before committing can save you from higher interest rates in terms of your monthly mortgage payments. Alternatively, many young homebuyers are compromising by living with family for a significant amount time to save up for a down payment. Getting this out of the way when you’re able to can help you get better loans to buy sooner than later in case interest rates end up increasing.

What kind of home is best for you?

Buying a home is a huge purchase and a big commitment. With shifts to digital and remote ways of working taking place in recent years, this has provided homebuyers with opportunities to be more flexible when buying homes. Homes in areas away from busy cities and urban hubs, for example, are considerably cheaper. This makes them a perfect option for buyers who work from home, or aren’t required to be present in the office on a consistent basis.

The lifestyle you expect to live is as much a factor to consider as money. Condos and townhouses offer lower maintenance costs in the long run, and are perfect for smaller households when compared to single-family homes. If the household grows, homebuyers looking for a side income can even invest in renting out purchased properties to passively earn back what they spent and look into bigger properties for family use.

What does the future look like?

In a previous post, we talked about the rising mortgage and interest rates. While the market may seem bleak or intimidating in its current condition, housing experts also believe factors such as supply have a high chance of returning to pre-pandemic levels by the end of 2024. If you are financially able, buying now while others may be intimidated by the prices can give you an edge. Conversely, taking some time to get your finances in order can benefit you when it comes to securing better loans and lower interest rates.

Working with experts can help you make better decisions for the loans you need, making sure you don’t get trapped with high interest rates or hidden charges. The future of fintech suggests that big data is the future of loans, as more online lenders are now using algorithms, which predict potential defaults better than FICO scores do. Data is also leveraged precisely to identify customers who fit various products well — which can give you peace of mind, as an aspiring borrower. Here at City Lending for example, we find the right programs to fit your needs and profile, making sure you get some of the lowest down payments and interest rates along with a premium service.

And if you’re still unsure, it’s worth considering that waiting it out in the market’s current wild conditions could result in even higher interest rates in the future. At the end of the day, buying a house is ultimately a huge investment, which comes with benefits such as privacy and a financial investment that for the most part will weather most economic storms.

Find out if this is the right time for you to get a house by contacting one of our loan officers today.


Content intended only for the use of citylendinginc.com

Written by Alicia Christopher

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