Here are some mortgage refinancing options, even for people with bad credit. investinyou (In partnership with acorns.)
Even homeowners with poor credit scores may be able to take advantage of mortgage refinancing options to ease their financial burden amid the coronavirus pandemic.
The housing market is one of the only parts of the economy that's seen a solid rebound during the Covid-19 crisis, thanks in part to market volatility driving mortgage rates down. The average rate on a 30-year fixed mortgage is now 2.81%,That's also sparked a refinancing frenzy from existing homeowners looking to capitalize on the new low-rate environment and secure a lower monthly payment or different loan terms.
But not all borrowers have good credit. More than 30% of consumers have a FICO credit score between 300 and 669, between "poor" and "fair" ratings, "Regardless of credit, it's still worthwhile looking into refinancing as an exercise to save money over time," said Lauren Anastasio, a certified financial planner at SoFi, a San Francisco-based online personal finance company.It makes sense for many borrowers to start looking for refinancing options with their former lender, said Anastasio. Because that lender has already given you a mortgage, it may be more likely to help you refinance, she said.
But it's also worth it for borrowers to shop around, according to Anastasio. There may be another lender that is willing to give them a better rate, even with less-than-perfect credit.Borrowers should also explore Federal Housing Authority loans, which have refinancing options with credit benchmarks that can be below 600. These loans are insured by the federal government and available through many lenders., a faster and less expensive way for existing borrowers to lock in lower rates.
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