Your Questions About Mortgage Refinancing With Bad Credit

Linda asks…

how long does take for your credit score to go up after your pay your debt?

i have about $9-$10,000 in debt, if i paid this off how long would it take to get enough credit to get a morgage loan? another question is if I put 5% down would i be able to get a morgage loan with even with bad credit?
so is it possible to get a $80,000 morgage loan if i have a huge down payment say $12,000 even with bad credit?

John answers:

First question, paying off old debts will increase your score but there is no set number in regard to how much your score will increase, but it will (see source)

As to the mortgage, it depends on more then just your credit score. Many people with lower scores get mortgages because they have a large down payment and steady employment, but they also will pay a much higher interest rate.

What your APR would be is factored by your score. So your best bet is to pay off your debts to raise your score. This will take some time, so save all you can for a down payment.

Here is a link to FICO to show you what your APR would be based on your credit score.

Hope this helps answer your question

Helen asks…

Where is the best place to go for a debt consolidation loan that won’t hurt my credit?

I have a ton of revolving debt (mostly credit cards) and just bought a house 5 months ago so I don’t have much for collateral. I’ve already been denied by a bank so is there anywhere I can turn to for cosolidation purposes that isn’t going to kill my credit? I want to consolidate my high interest credit cards onto a lower interest loan and need suggestions.

John answers:

The best is to deal with a company you already know (your bank).

Maybe you can refinance your mortgage AND your debts (new mortgage… Urgent repairs…)

Stay strong and keep an eye on your expenses.

Good luck !

Laura asks…

How can I buy a house with horrible credit?

I am trying to buy a house because the neighborhood we are in is getting worse by the second, but we have horrible credit due to stupid kid stuff. Anyone know of a place that you can get a place with horrible credit,no down payment, low payments a month in a good neighborhood?

John answers:

It will be near impossible for a person with no down-payment and bad credit. Your bank probably will not help you because of your credit rating and most lenders will not finance 100% of the purchase price with bad credit. However, there are a couple of options. There are homeowners that will lease a home to you with a purchase option at the end of the lease. Usually, a percentage of the lease payment will be applied to a pre-determined purchase price as long as they are made on time. Some owners even take this a step further and are willing to agree to let you buy the house after you pay the mortgage payments for a minimum of one year. If you can prove that you have made 12 consecutive on-time payments (usually they will want cancelled checks or bank statements) then many lenders will allow you to refinance the property in your name which may allow you to avoid coming up with out of pocket closing costs.

Another method is called seller carried financing. Most lending institutions will lend 65% to 80% of the purchase price of the home if you have a job and a pulse. The seller would become the “second mortgage” and you would pay payments on the remaining balance to the seller until you either sell the house or refinance it down the road. You would have a first and second mortgage but that is not uncommon with 100% financing.

Hope this helps.

Sandra asks…

How do i get a mortgage if i have credit problems?

I would love to buy my own home, but have credit problems due to divorce, how can i get around this. Has anyone out there had this experience and what did u do to get yourself a mortgage?

John answers:

This can be done a few ways

A high loan to value loan can usually be done even if you have bad credit. If you put 30 percent to 40 percent down, , you providing the lender more security that you will follow through on the loan.

Another way is to get a cosigner with excellent credit, such as a relative. They can lend you there credit until your credit imporves. Once your credit improves, you can refinance and own the property on your own.

The last way is a hard money loan from an individual. These are not recommended because of the high costs and interest rates.

Sharon asks…

How can i get my credit score up?

Its not bad but its not good either. I just want some tips on how to get it to go up so i can be better qualified for a loan.

John answers:

Credit Score Explained

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