Made Easy With Good Credit or Bad Credit
In this section we will cover some key questions to help you determine if refinancing your home makes good financial sense.
The first question that everyone gets asked is, 'what is your credit score?' Why is this number so important to obtaining financing? For starters it tells the banks and lenders how well you pay your bills. For some that means great credit scores because they have never had a late payment or may have only had a few slight dings on their credit over time. Most banks and lenders call these people with Good Credit the 'cream of the crop.' Their credit scores are typically above 620. Those people with Bad Credit typically have scores below 620 and are challenging, but not impossible to refinance.
Once your credit score is determined you are automatically placed, in the mind of the banker or lender, into one of those two categories. Most of them will say 'Yes' they can refinance you based only on the credit score without looking at your financial information. Be aware of the loan officers or mortgage brokers that just jump at the chance to get a loan. In their way of doing business it is all a numbers game. Some receive bonuses based on the number of loans they close in a given month, thus taking up your precious time only to tell you three-quarters of the way through the process that you don't qualify for that program any longer, or that the interest rate has just gone up one percent, because you no longer fit the 'cream of the crop' programs.
This big waste of time and effort happens because they didn't take the time at the beginning of the process to get to know you and your financial situation. If you are going to trust someone to work in your best interest, wouldn't it be great if they really knew and understood you, the person, and not just you the numbers on a paper? You are a human being after all, not just a number on a page.
Once you have been placed in one of the two categories, many things start to happen. If you have Good Credit you will find that you can qualify for more money when refinancing. Let's say, for the sake of easy numbers, that your home is worth $100,000. You can easily obtain a loan, without having to pay for private mortgage insurance (PMI), by obtaining a loan for 80% or less of the Loan-to-Value (LTV) of your home. Thus, in this scenario you would be able to obtain a loan for $80,000. You may be able to qualify for up to 95%, or $95,000, but we Lightning Mortgage consultants would be better able to assist you in determining if that is the right course of action for you because that high of a LTV does require PMI.
If you fall into the Bad Credit category there are two major changes to what you may or may not be able to do. If your credit score is in the 580 - 619 range, you may be able to qualify for FHA or VA Loans. Below 580 you will find that most banks and lenders will not even talk to you or bother to give you advice on credit repair. They only look at the here an now, not the future. Our consultants remember you aren't just a number on a piece of paper. You are a living breathing person who deserves to be treated with respect. If you own a home worth $100,000 and have bad credit then the value of your property would only allow you to qualify for at most 60%, or $60,000, of the value of your home. The other down side of having bad credit is the interest rates offered by lenders are typically much higher because you are considered a higher risk to the banks and lending institutions.
For a FREE evaluation of whether refinancing is right for you, simply complete our Loan Application. One of our consultants will get back to you to discuss your options.
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