There are many types of bad credit loans and resources available for consumers with poor credit. The good news is that today’s mortgage industry has become quite competitive in this area and that alone will provide consumers with a good edge and the consumer should still be able to find a decent interest rate. If a consumer needs to refinance a mortgage there are many lenders who will be glad to work with the consumer. By already having one’s original home is the best starting point.
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General Overview for Bad Credit Refinance Loans
Consumers should be honest with lenders about their credit problems. If a consumer does have a poor credit history & background, they may have to pay a higher than average interest rate due to the fact that they will be considered a high-risk borrower.
Below are a couple of starting options that consumers may wish to investigate further in order to obtain a Bad Credit Refinance Loan. These are merely suggestions and consumers should really check out several lenders to see what programs may be curently available.
• The Veteran’s Administration offers Bad Credit Refinance Loans. Consumers should check with the VA for more detailed information.
• Although a consumer may have poor credit, they may be able to take out a Home Equity Loan. The equity a consumer has in their home/property is simply the difference between what the consumer owes and what the home/property is valued at. A Home Equity Loan provides an avenue for consumers to borrow money based on that amount. The amount of a consumer’s equity is not based on what they paid for their home or on their credit score, but it is based on what the house is worth. The amount a consumer can actually borrow against the established equity certainly varies from one lender to the next lender. It is also determined by the type of home equity loan a consumer may apply for.
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Common Home Equity Loans Refinances
• Refinance Home Equity Loans
Should a consumer have bad credit, the interest rate they will pay on their home equity loan will be higher. The consumer’s credit score is determined by some rather extraordinary criteria. In addition to the usual criteria a consumer might expect, like income, past payment history as well as total debt, it also includes criteria as to a consumer’s education level, work history, and how recently the consumer may have moved. The APR, generally, on Home Equity Loans is much lower than other consumer debt. Consumers should beware that their home is collateral for the loan; therefore, if the consumer defaults on payments, the consumer could lose their home.
About Bad Credit Refinances
A disadvantage is that refinancing does come with associated costs such as appraisal fees, processing fees, administrative fees, etc., and these do all add up. It is vitally important that consumers ensure that the money they would save by refinancing is greater than the amount of money they would have to expend to do it.
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