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How can I refinance my mortgage with bad credit?

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If you have poor credit but want to take advantage of the current low interest rates and refinance your mortgage, make sure first it makes good financial sense, and don’t forget to factor in closing costs and other fees. (iStock)

Bad credit happens. This may be especially true for the thousands of people out of work due to the coronavirus pandemic. Even so, you can refinance your mortgage with bad credit. It may be more challenging, but it’s possible.

The coronavirus pushed interest rates to record lows. Such low rates are the driving force behind the surge in mortgage refinances — up 89.54% from last quarter and up 297.3% from just one year ago, according to US Mortgage Originations.

Take a look at your options and your limitations, and visit Credible to compare rates from multiple lenders all in one place.

How to refinance your mortgage with bad credit

If you have bad credit, you may qualify for private-sector programs, options backed by the federal government, or you can try co-signing with a stronger borrower. If you’re considering using a cosigner or want to see if you’re eligible for a refinance on your own, Credible can help. Click here to learn more about refinancing your mortgage and whether you’d be approved today.

Here are four mortgage refinance options for potential borrowers with bad credit.

  1. FHA Streamline Refinance program
  2. FHA rate-and-term refinance
  3. VA refinance 
  4. Portfolio loan

1. FHA Streamline Refinance program

If you have an existing FHA loan, you may qualify for the FHA Streamline Refinance program, which can permanently lower your monthly payments. Most lenders won’t check your credit or demand an appraisal because you already have an FHA loan. You may qualify for current refinance rates, but you’ll likely have to show you’ve made six consecutive monthly payments on-time, in-full.

2. FHA rate-and-term refinance

A rate-and-term refinance is for anyone who already has an FHA loan. It’s meant to help you refinance your current mortgage and reduce monthly payments. A new home appraisal and credit check are part of the application process, and like the Streamline Refinance program, you must show six months of consecutive on-time payments, paid in full.

3. VA refinance

If you currently have a VA loan, you can refinance with the Interest Rate Reduction Refinance Loan (IRRRL). Generally, lenders won’t require a credit check or home appraisal to qualify. The VA allows you to refinance up to 100% of the property’s value, but there is an upfront funding fee that may be added to the loan amount.

4. Portfolio loan

A portfolio loan is originated and retained by your mortgage lender. Because your mortgage lender is 100% responsible if you default on your loan, your credit history and finances will be reviewed. There are likely closing costs and other fees due at the time of closing or added into your loan payment.

HOW TO DECIDE IF YOU SHOULD REFINANCE YOUR MORTGAGE 

What are today’s mortgage rates?

The COVID-19 pandemic pushed interest rates lower than they have been in many years. That’s why it’s such a good time to refinance your mortgage — even if you have bad credit.

These are current mortgage rates, according to Freddie Mac:

  • 30-Year Fixed-Rate Mortgage (FRM): 2.79%
  • 15-Year FRM: 2.23%
  • 5/1-Year Adjustable Rate Mortgage (ARM): 3.12%

Mortgage interest rates fluctuate with supply and demand in the secondary market. If the supply of money goes up and the demand for money goes down, interest rates will go down as well — exactly what has happened due to COVID. If you want to take advantage of today’s low mortgage rates, make sure you use Credible’s free online tools to refinance and start saving today.

The Federal Reserve doesn’t set mortgage rates, but it can influence rates. This past August, Federal Reserve Chair Jerome H. Powell stated that interest rates would likely stay low for some time to recover from the recession the COVID-19 pandemic caused.

Compared to the current rate of 2.65% for a 30-year FRM, on January 2, 2020, the 30-year mortgage rate was 3.72%, and on December 26, 2019, the rate was 3.74%. On the same date in 2018, the rate was 4.55%. Even one percentage point can make a big difference in your monthly payments.

If you have bad credit, but you want to take advantage of the current low-interest rates, use an ​online mortgage refinance calculator to determine new monthly costs. Credible can also help you crunch the numbers and determine what your monthly payments and total costs would be.

REFINANCING YOUR MORTGAGE? 5 QUESTIONS YOU SHOULD ASK FIRST

Should I boost my credit score first?

Banks, credit unions, and many online lenders offer better interest rates to people with good credit. Although the required credit score to qualify for a refinance varies from lender to lender, most mortgage loans require a minimum credit score of 620, according to Experian.

To get the best rates (and pay less interest over the term of your loan), it makes sense to boost your credit score before applying for a mortgage refinance. Accordingly, interested borrowers should visit Credible​ to get prequalified without impacting their credit score.

THE MORTGAGE REFINANCE WINDOW COULD END SOON: WHY YOU SHOULD ACT NOW

How to increase your credit score

  1. Make all your payments on time. Payment history accounts for a large chunk of your credit score—35%. 
  2. Pay down debt. Paying down all credit card balances to less than 30% can improve your credit utilization ratio (the percentage of credit you’re using compared to your available credit) and boost your credit.
  3. Don’t close old credit accounts. Even if you’re not using an old credit card, keep it open to improve your credit history.
  4. Don’t open too many accounts. Lender’s inquiries into your credit can hurt your score, and carrying too much debt is never a good idea. 
  5. Keep a close eye on your credit score. Checking your score doesn’t hurt your credit. It can also give you an idea of where you stand when applying for a mortgage refinance
  6. Make sure your credit report is error-free. When you look at your credit report and find the information you’re not sure about, contact the three major credit bureaus and report your findings. 

If you’re thinking of refinancing, consider using Credible. You can ​use Credible’s free online tool​ to easily compare multiple lenders and see prequalified rates in as little as three minutes.

REFINANCING YOUR MORTGAGE? DON’T MAKE THIS MISTAKE

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Loans Bad Credit Online – Loans Bad Credit Online – PNC Personal loan 2021 Review | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – PNC Personal loan 2021 Review | Fintech Zoom

Loans Bad Credit Online – PNC Personal loan 2021 Review

Top perks

Low minimum loan amount

Customers can borrow $1,000 to $20,000. That minimum loan amount of $1,000 is unusual in the personal loan industry. A low minimum threshold means you can get the cash you need to cover small emergencies without being tied down to a larger loan.

Wide range of repayment terms

You have between 6 and 60 months to repay the loan. There are pros and cons to longer repayment terms, so this flexibility allows you to customize your term to your situation.. With PNC, you have the option of designing a repayment plan that fits your monthly budget.

Joint applicants welcome

Whether you need a joint applicant’s high credit score to qualify for a lower loan interest rate or someone has decided to co-assume responsibility for a personal loan, PNC allows for joint applicants.

What could be improved

Terms depend on location

The first thing you will be asked is where you live. On its loan homepage, PNC states that “PNC product and feature availability varies by location.” While this may be good news for borrowers in some areas of the country, it could be bad for others. You’ll need to see what it means for you.

Lowest interest rate reserved

If you’re looking to borrow enough to make repairs to your roof or buy a new furnace, you might not borrow enough to qualify for PNC’s lowest advertised interest rate. That’s because that low interest rate is reserved for those borrowing more money. For example, PNC will automatically assign a $5,000 loan a higher interest rate than a $15,000 loan.

Loans Bad Credit Online – PNC Personal loan 2021 Review

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Loans Bad Credit Online – Loans Bad Credit Online – PNC Personal loan 2021 Review | Fintech Zoom

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Loans Bad Credit Online – Badger Advisors Gets Bad Review For Credit Card Refinancing | Fintech Zoom

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Loans Bad Credit Online – Badger Advisors Gets Bad Review For Credit Card Refinancing

Editorial Credit: Djomas

Badger Advisors wants you to believe they are offering credit card refinancing and have begun flooding the market with debt consolidation and credit card relief offers. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2021 Reviews, the personal finance review site, has been following Badger Advisors, Rockville Advisors, Old Dominion Associates, Sooner Partners, Snowbird Partners, Gulf Street Advisors, Memphis Associates, Safe Path Advisors, Plymouth Associates, Tate Funding, Braidwood Capital, Tiffany Funding, Nickel Advisors, Coral Funding, Neon Funding, Polk Partners, Ladder Advisors (also known as Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).

Editorial Credit: Ollyy

Credit Card Refinancing

Credit card refinancing is a possibly feasible solution for your piling credit card debt. Under credit card refinancing, all of your credit card balances go into one account where a single interest rate is charged. If you have a good enough credit score, then you may be able to qualify for credit card refinancing at low-interest rates. Just like other refinance options, credit card refinancing also entails a loan offer to pay off your debts and improve your financial health. You will then have to focus on the credit card refinancing loan only and no other credit card balance.

Another major advantage of credit card refinancing is that the interest rate will not vary over the lifecycle of the loan. This will simplify your life a lot and make debt servicing much easier since you will know how long it will take for you to pay back your loan. With variable interest rates that you often find in credit cards, you can end up incurring higher interest expenses. But with a fixed interest rate that credit card refinancing purveys, you will not have to face this unwelcome possibility.

With the right kind of credit card refinancing loan, you can possibly save hundreds and even thousands of dollars on interest expenses this way. Of course, you will have to be punctual with your monthly repayments. If the terms and conditions of your credit card refinancing loan are favorable then you may very well embark on the road to financial freedom and get there before you know it.

Is There Any Difference Between Credit Card Refinancing and Debt Consolidation?

From the aforementioned discourse, you may have realized that credit card refinancing is very similar to debt consolidation and that indeed is the case. Both are about settling all debts with one favorable loan so that you can focus on this loan only and enjoy its lenient terms and conditions to rebuild your credit score and gradually work your way towards debt freedom.

Provided the terms and conditions of your credit card refinancing loans are suitable, this financial option represents a viable route for managing and paying off your outstanding liabilities in a better way.

Why Credit Card Refinancing loan May be Better

A credit card refinancing loan may be a better choice than a balance transfer card. The idea of a balance transfer card is to take advantage of the zero APR introductory period that usually lasts from 12 to 18 months. However, there are a few caveats due to which a balance transfer card may not exactly be a good idea.

The zero APR period may look tempting but it still may not be long enough to pay off your entire credit card debt. And that is unfortunate because once the zero APR limit expires then you will have to pay very high interest and you may even incur penalties. Then there is the question of balance transfer fees that can offset the advantages of the zero APR time frame.

Another problem is that the credit limit of the balance transfer credit card may not be big enough to accommodate all of your credit card balances. This is a real possibility since your credit card debt is high to begin with and it may not fit within the credit limit of the balance transfer card.

Then there is the danger of spending with the balance transfer credit card. The inability to control spending and use of credit cards is the very reason why people fall into credit card debt traps in the first place. This possibility is very much open and present with balance transfer cards. Instead of helping you, they may worsen your debt situation since they too are credit cards that are all too easy to misuse. What’s worse, they have exorbitant interest rates.

Such a scenario cannot transpire with a credit card refinancing loan since it is not a credit line – this loan immediately goes towards paying off your credit card balances due to which there is no peril of misuse. Instead of getting another credit card in the shape of a balance transfer card it is much safer to freeze all of your cards and repay your debts.

If you do your research on credit card refinancing then you might find that some people also include balance transfer credit cards under this heading. But due to the drawbacks mentioned above, you should try to steer clear of balance credit cards and instead take out a personal loan for the sole purpose of repaying your credit card debts.

The prime advantage of credit card refinancing is that they can provide you with a low interest rate if you have a good enough credit score.

How to Make Credit Card Refinancing a Success

While credit card refinancing provides good terms and conditions, it is not a magic elixir that will cure all of your financial woes.

To make your credit card refinancing a success, you will have to follow some good money habits and exercise discipline at the same time.

You should try to find extra sources of income. You can think about working overtime at your job if that is possible. If not, you can opt for freelancing gigs and projects. Even if you earn a few hundred dollars through this route each month, it will prove to be of great assistance in helping you become debt-free more quickly.

You should also think up ways of saving on expenses. A major reason why consumers incur enormous debts is that they do not track their spending. This is a habit that you must remedy forthwith if you wish to get out of your financial predicament quickly. No matter how little your expense, make sure you record it somewhere secure. You can utilize apps to record your transactions. Thus, you will know the areas on which your spending is inordinate. You will also be able to compare your spending with your planned budget.

You should get in touch with your financial advisor to find out whether credit card refinancing is right for you.

Loans Bad Credit Online – Badger Advisors Gets Bad Review For Credit Card Refinancing

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The Pros and Cons of Being an Authorized User on a Credit Card

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Having friends has its perks, especially if that friend lets you be an authorized user on their credit card.

If you’re thinking of asking someone you trust to be added as an authorized user on one of their cards, it’s important to know what you’re getting into with this decision. Instead of getting your own credit card, you may be thinking of taking this step so that you have access to a card when you need it. There are advantages and disadvantages to being an authorized user. Keep reading to learn the pros and cons of being an authorized user on a credit card.

What is an authorized user?

An authorized user is someone who has permission to use a credit card account. While they’re legally able to use the credit card, they’re not responsible for paying off the credit card debt. Most top credit card issuers allow their cardholders to add an authorized user to their account.

Can anyone be added as an authorized user?

Most credit card issuers have age requirements in place for authorized users. Other than that, there aren’t restrictions.

The pros of being an authorized user

Being an authorized user on a credit card has its advantages:

  • This can help build credit. For someone with little or no credit, being added as an authorized user can help them build a good credit score. That’s because many credit card companies report the history of the account on an authorized user’s credit report. This can be helpful in the future when you attempt to open your own credit card account.
  • It gives a person access to a credit card. With poor credit history or a bad credit score, it can be challenging to get a credit card. Being added as an authorized user can give you access to a credit card, which can be especially helpful during an emergency.
  • You can learn how to manage money. Being an authorized user is a great way to learn how to manage money better. You can learn how to make smart financial decisions before opening your own credit account.

The cons of being an authorized user

Here’s what you need to look out for:

  • The account holder’s actions can negatively impact your credit. If the credit cardholder misses payments or racks up a lot of debt on the card, it could negatively impact your credit. Before being added as an authorized user, it’s a smart idea to consider whether the credit cardholder is financially responsible.
  • They can remove you at any time. The credit cardholder can remove you as an authorized user at any time. When this happens, that account will no longer appear on your credit report. This is something to consider if you want to build your credit.
  • It could cause relationship issues. If you and the cardholder disagree about which charges you’ve made or how much you owe them, this could cause added stress and could lead to relationship issues. Consider setting clear boundaries and ways to track purchases made so that you minimize disagreements or confusion.

The bottom line

Being added as an authorized user may be a good option for you. But, you need to be well aware of the positives and negatives. Talk with someone you trust about this opportunity and outline expectations and rules. Then you can both decide if it’s the right move to make.

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