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7 Options for Refinancing with Bad Credit

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Tags: Refinancing, First Time Home Buying, Credit, Mastering Mortgages

There’s a common misconception that you can’t refinance with bad credit. Lenders are increasingly accommodating lower credit scores and finding other ways to help homeowners refinance mortgages at the best interest rates possible.

Living in the era of modern banking, borrowers have the option to work with a digital lender. In the case of Wyndham Capital Mortgage, we’ve capitalized on our digital advantage and redirected the savings right back to the borrower, offering the industry’s lowest rates and never charging hidden lender fees. Regardless of the direction you go, here are a few options for refinancing with bad credit:

FHA Streamline

FHA Streamline loans have simple eligibility requirements, forego credit checks and are one of the quickest ways to refinance. Approvals are decided by factors like the equity you have in your home and your mortgage payment history. Benefits often include waived appraisals and no closing costs, according to credit.com. When you work with Wyndham Capital, you’ll refinance quickly and easily from the comfort of your own home and a time that works best for you.

Cash-Out Refinance

Cash-out refinance turns the equity in your home into cash-in-hand, even if your credit score is less than stellar. Cash-out refinancing is an excellent option if you’re looking to make improvements on your home, make a large purchase, or pay off debts.

VA Streamline 

VA Streamline loans or interest rate reduction loans (IRRL) are reserved for those who have served on active duty and make refinancing easy (even if you have little to no equity in your home), with fewer qualifications than an FHA Streamline loan. VA Streamline loan requirements don’t look at your debt-to-income ratio and don’t require a credit check or new appraisal.

Desktop Underwriter Refi Plus

Wyndham Capital Mortgage is proud to offer the Desktop Underwriter (DU) Refi Plus™ program. This unique program lets Fannie Mae mortgage loan holders with a good payment history refinance for a lower rate and without mortgage insurance. DU Refi Plus requires no minimum credit score, perfect for those with poor credit.

Improve your Credit Rating

While there are options to refinance with bad credit, lenders are more likely to work with borrowers who possess higher credit scores and may suggest holding off on refinancing until you’ve improved your credit score. Luckily, there are multiple ways to improve your score. Start by reviewing your most recent credit report to see where you stand and to ensure there are no discrepancies, fraudulent accounts or incorrect billing. You can check your credit score for free at annualcreditreport.com. If you’re not in a rush to refinance, we suggest implementing some of the following financial habits into your routine to improve your credit.

Pay Off Debt & Keep Low Balances

Pay off debt and lower your owed balances using tactics like the debt snowball or pay off the most expensive debts first to save from paying interest. Reducing balances will also help improve your debt-to-income ratio.

Only Apply for Credit Accounts You Need

Opening that store card just to save 15 percent off your purchase may not be the best move if you’re trying to build your credit. Unnecessary credit can hurt your credit with hard inquiries and give you another avenue to accumulate debt.

Whether you’re looking to lower your interest rate, cash out on your home’s equity or reduce your monthly payments or the life of your loan, Wyndham Capital Mortgage has the home loan products tailored to best fit your needs. 

When you work with Wyndham Capital, you’ll get first-class service from expert loan specialists well-versed in helping you get the most out of your refinance. Chat with a home loan specialist today to learn the benefits refinancing with a digital online mortgage lender has to offer.