10 Feb Cash Out Refinance With Bad Credit

Cash Out Refinance With Bad Credit

Looking to consolidate debt or make home improvements?  Accessing your home’s equity even with less than perfect credit might be a great option. We provide details below about how to get approved for this type of loan and what to expect for those that have good or even bad credit.

What does a cash out refinance mean?

Over time the value of your home appreciates.  As it appreciates you gain equity in your home.  With a cash out refinance you can take advantage of that equity and pull it out for your home improvements or financial needs such as paying off other higher interest debts.

What types of properties are eligible for cash out refinance?

A cash out refinance can be done on the following types of residences:

• Primary residence
• Second home (vacation home)
• Investment property

Max loan to value ratios vary depending on property type, occupancy, credit score, and mortgage types of financing.

Let’s give an example for a better understanding.  If you have less than a 600 credit score and your property is a second home you may be limited to a 65% loan to value.  Cash out refinance loans are available for those that have credit as low as 500 while meeting certain equity and income & financing requirements.

Is a cash out refinance with bad credit an option?

Because there are several different mortgage options available when looking at getting a cash out refinance there are still options for those that have bad credit.  One possible option with those with fair to poor credit is an FHA loan.   Another may be a VA loan if you are eligible for this type of financing.  You may be able to do a cash out refinance for up to 90% of your home’s appraised value even if you have credit below 580.

What are the benefits of a cash out refinance when it comes to consolidating debt?

By consolidating high interest credit card debt with a cash out refinance there are a few great benefits.

1. Paying down your credit cards typically results in higher credit scores.
2. Your interest rate on the mortgage will typically be much less than the credit card debt interest are typically much higher than mortgage rates. AND
3. Interest you pay on your mortgage IS tax-deductible
4. More of your money is going toward paying off the the principal amount of your debt rather than interest itself

What are the benefits of a cash out refinance when it comes to home improvements?

It is important to note that the equity you put back into your home will increase the value of your home but it isn’t of a dollar to dollar benefit.   Putting in a new kitchen worth $30,000 doesn’t necessarily mean that your home’s value will increase by $30,000.  Plus every market is different in terms of what upgrades are valued more than others.

The most obvious benefit of using your home’s equity to make improvements is that allows you to do the things you’ve always dreamed about but haven’t been able to do in the past.

Improvements such as;

1. A kitchen remodel
2. New flooring
3. New appliances
4. New roofing
5. Upgraded landscaping

Whether you have good or bad credit reach out to us by phone at 801-550-1796 or email us at z@shilozitting.com to see what options are best for you.  With over 70+ lenders we have plenty of options for your situation.  Help us, help you!.