How to Refinance With Low Credit & Owing More on a House Than the Appraisal
- 1). Obtain an FHA mortgage when refinancing your mortgage. You don't need as high a credit score to qualify for FHA financing. According to the FHA Home Loan website, the minimum score is 620. Discuss this option with your broker or lender and inquire about other requirements to obtaining FHA financing.
- 2). Pay the difference. Even if you're approved for an FHA refinancing, this mortgage loan requires at least three percent equity. Your mortgage lender will only finance 97 percent of the house's value. Review your finances and disposable funds to see if you can pay the difference out-of-pocket.
- 3). Refinance with the help of a hardship program. If you're behind on your mortgage, can't qualify for refinancing because of a low credit score and you owe more than the houses' worth, these factors may qualify you for the Making Home Affordable Refinance program. Lenders determine if an applicant meets the criteria. If approved, you can refinance an upside down mortgage loan -- up to 125 percent of the property's value.
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