600 Credit Score or Lower and Mortgage Refinancing

Summary

Borrowers with bad credit still have many refinancing options.

There are many mortgage lenders who specialize in people with challenging credit situations.  Don't be discouraged if you have been rejected by one lender.

Here are some tips that may help get you approved.

Basics

Mortgage lenders offer many different loan types for people with bad credit. These loan types include:

• 30 year fixed loans

• interest only loans

• minimum payment option loans

• other mortgage loans

30 Year Fixed Loans

This is the traditional mortgage loan. It has a loan term of 30 years and is fixed for 30 years. This loan option usually has the highest interest rate relative to other mortgages.

Interest Only Options

This type of loan allows you to pay at an interest only level. It is a lower payment than a regular payment. This is because you are paying interest only and not any of the principal of the loan. The loan size does not increase or decrease with this type of mortgage. The principal balance remains the same.

Minimum Payment Option Loans

These types of loans allow a person to pay even less than an interest only payment. These loan types are usually the lowest possible payment you can get.

These loans have the possibility of negative amortization. This is when your loan size increases over time.

Other Mortgage Loans

Additional loan types include 40 year loans, 45 year loans, 50 year loans, and more.

How To Get Approved

You are much more likely to be approved if your loan has more equity. The closer your loan gets to 100% of the value of your property the less likely you are to be approved if you have bad credit. If you can document your income and assets you will also be more likely to be approved.

There are mortgage lenders that work with borrowers who have been late by 30 days, 60 days, or even more. Some mortgage lenders will accept multiple late payments on mortgages.