Bad Credit Remortgages – Financial Situations Okay Too With FHA

I’m sure you’re already aware that it is difficult to get a home loan if you have bad credit. But did you know that there’s one group of people for whom that might not matter at all? Did you know that if you have bad credit, even very bad credit, and you already have an FHA home loan, you can remortgage or refinance anyway? Easily too.

Assuming you do not want to take out cash. All you have to do is apply for an FHA streamline remortgage or refinance. Bad credit doesn’t matter because under this program, you qualify without credit check (or, for that matter, proof of income). It’s true. If your new remortgage reduces your monthly principal and interest, that is.

This remortgaging without credit check can be used for consolidating loans. But not by everyone. As mentioned earlier, you can’t take cash out, so you’d have to pay your creditors at the closing, and after paying them you still have to have lower monthly payments. This means, you must have paid off a big chunk of your principal.

You don’t need proof of income or good credit. Really. You don’t have to show income taxes for 2 years, bank statements and pay stubs for 2 months, or get credit reports. So you have less paperwork to provide. In addition, there are 2 ways to do it without out-of pocket expenses, depending on the equity in your home.

1. “No cost” remortgages (refinances). This means that there are no out-of-pocket expenses for you.

2. Rolling closing costs into the new mortgage loan. This too means that there are no out-of-pocket expenses for you. But with a difference.

Here’s the difference between the 2, with examples:

1. If you take out a $200,000 home loan with closing costs of $3,000, the lender pays the $3000 at closing, gives you a loan of $200,000 but instead of charging you 6%, charges you 6.2%, or 6.11% (the numbers depend on how greedy a particular lender is and/or how high their overhead is).

2. If you take out a $200,000 home loan with closing costs of $3,000, and the interest rate you qualify for is 6%, the lender will give a mortgage of $203,000 at 6%. This method depends on how much equity you have in your home. When everything is said and done, the loan to ratio cannot exceed 96.5% (or 90%, for people with really bad credit).

What does the difference mean to you, practically? Nothing, financially, though it’s possible that with the 1st method you may end up paying a bit more than with the 2nd method. (You pay more than $3,000 for your closing costs with both versions.) There’s a practical difference only if you have the money to pay the closing costs but choose not to. Specifically, as mentioned above, you pay more, as you’re borrowing it. How much you pay for it will depend on the mortgage interest rate you get.

So, if you have an FHA mortgage and bad credit, remortgage away, take advantage of lower interest rates.

Author Bio: Bad credit remortgages can have severe results, if you don’t know all you need to know. And there’s much to know, more than can fit into one article. To get better results out of your bad credit remortgage, visit http://www.RemortgagesBadCreditornot.com.

Category: Finances
Keywords: remortgage,remortgages,remortgaging,bad credit remortgage,remortgage with bad credit

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