1 of 4

Write now Article Tools

Page 2 of 2

allow for bankruptcies whatsoever. But back to the real nuts and bolts of your credit report. Of your open accounts, calculate a total of what you pay each month to your creditors. Even if a loan is in deferment, like a student loan, most lenders will want to know a worst case scenario of how much you may be required to pay each month on those accounts. By determining how much you pay out a month beyond your mortgage, it will help you in considering your new mortgage payment if it should increase, like in the case of refinancing to receive part of your home's equity in cash or if paying off outstanding debts. Evaluating your credit report helps to put things in perspective.

In continuing your research, think of who you'd like to handle your mortgage lending needs. Did you go by a referral from a friend or family member for your initial mortgage? Would you consider them again? Does your bank offer mortgage lending options or would you like to use a mortgage broker who can most likely utilize your bank's available loan programs? The major difference between a bank and a mortgage broker is that a bank may have more set fees and terms where a mortgage broker can be more negotiable or flexible since they have the ability to shop various mortgage lenders. Whomever you choose, you should be comfortable with them in asking questions and receiving relevant answers. Remember, this is your personal information, who would you want scrutinizing it? Review what kind of loans they're presenting to you and take your time in examining the attributes and features of each loan. Does the loan provide you with what you're wanting while still being understandable? Does it sound too good to be true? Do you have any questions about the fine print? Even at closing, if you have a question or a doubt, make sure it's resolved before finishing your mortgage transaction. You can reschedule your signing.
The last part of your research is a little bit more difficult - think like a mortgage lender and the conditions of your loan. Is your less than perfect credit due to past due payments on credit accounts or is it because of high balances? Can you support any credit inconsistencies with proper documentation? Do you have a stable income? Is the amount of your assets reasonable? How large is your current debt load? Is refinancing advantageous and does the loan make sense? In answering these questions, it paints a more detailed picture of what every lender will be evaluating. Additionally, it may bring up questions or concerns you haven't considered. To a lender, it's all about risk and numbers, especially with the mortgage market being in the state of fluctuation it's currently in - there's less of a chance of a lender taking a risk on a loan or granting an exception although your credit score may not meet the loan's criteria. When considering risk, lenders are taking a look at much more than your credit and your representative score, like the current market trends of your neighborhood or city and comparable values of homes near you. And as for the numbers, lenders are evaluating your income versus your debt, your mortgage balance versus your home's value as ratios. The larger the ratio, the larger the risk.
Whoever you choose to work with, bear in mind that they're working for you. Although your credit may not be stellar, there are still options out there for you and accommodating your refinance.

Learn more about this author, Gayla Jennings.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

Know something about Refinancing your mortage or home loan when you have less than perfect credit?
We want to hear your view. Write now!