A low credit score will cost you when it comes time to purchase a loan.
The exact cost would depend on how low your score is.
It does not necessarily mean that you won't qualify, but you could end up paying a higher interest rate.
The current state of the banking industry also does not help the situation.
Before the financial meltdown it was possible to qualify for a home loan with a credit score as low as 550, as long as you didn't mind putting down a deposit on your purchase.
At the time you would also have to show a documented source of income.
The cost you pay for a low score usually comes in the form of a higher interest payment.
For example, if you score was decent you could receive an interest rate of 5% for a home that cost $100,000 for a 30 year mortgage.
On the other hand, with a low score you would receive a rate of 6% for the same home! That's a $63 per month increase and over the life of the loan it would add up to roughly $22,000! This is why it is extremely important to work on raising a low rating before you apply for a mortgage.
Your credit is not the only factor that determines your approval, your current income and number of years at your current job will also be considered.
In the case of a refinance your home's value is used to determine if you will be eligible for a cash out refinance.
A look at the homes that most recently sold in a 10 mile radius will be used to determine the exact worth of your home.