Below 500 Refinance

If your credit score is below 500, you may still be able to refinance your mortgage, pull cash out, pay off debts, and help get your credit back up to where it should be. However, you will need to have significant equity in your home, from 30% to 50%.

If you are considering refinancing and have significant collection accounts, you may want to contact your creditors to see what payment is required to satisfy the debt. Having complete contact information and payoff amounts will help your mortgage professional find the best program for you.

For a typical refinance with credit scores below 500, equity can be calculated by dividing the balance of your first mortgage by the value of your home. For example:

I owe $250,000 on my first mortgage. I believe my property would appraise for $750,000. I get out my calculator and do the following:

First, I take $750,000 MINUS $250,000 EQUALS $500,000 - THIS IS MY EQUITY
Then, (Equity) 500,000 DIVIDED BY 750,000 (Value of Home) EQUALS 0.66
Finally, I take 0.66 and MULTIPLY TIMES 100 to get 66% - MY EQUITY PERCENTAGE

So I have 66% equity in property, which is more than enough to qualify for a mortgage refinance even with a credit score below 500. Try this with your mortgage to see what your equity percentage is.

Having a credit score below 500 means that you will not qualify for any conventional mortgage refinance. You need a specialized program, from a specialist in below 500 credit score refinance situations. If you need help, and believe you may have 30% or more equity in your home, please contact us at 703-891-4509.

Credit Scores Below 500 mean that your credit can not truly be considered when qualifying for your refinance. Lending decisions for refinances belw 500 FICO scores are based on how much equity you have in your home, the condition of the property, and the value of the property.

When refinancing with a credit score below 500, you should generally expect to receive a higher interest rate than you would if your score was over 500. That means that most of the time, your interest rate will actually increase from what you are currently paying, however most refinances below 500 credit scores are Interest Only, which may result in lower total monthly payments, especially if you are currently in a forbearance or payment agreement with your current lender or are paying off credit card and personal loan debt through refinancing.

Because mortgages for borrowers with credit scores below 500 are based on the equity in the home they are refinancing, it is customary for the lender or investor to require a real estate agent's review of the property's most recent appraisal. This is often referred to as a BPO, or Broker Price Opinion.

One of the biggest goals of refinancing for a borrowers below a credit score of 500 should be taking the first step to getting that credit score up above 500 or even 600 within 1 to 2 years. Consolidating certain debts, curing defaults and liens, and actively engaging in credit repair can all help get your credit score up from below 500 to a higher score, at which point you should consider refinancing into a conventional mortgage with the lowest payments possible.

Knowing exactly how much you owe is an important aspect of succeeding in refinancing with a credit score under 500. The only way to determine exactly how much you owe on our first mortgage is to order a payoff from your current mortgage company. We can do this for, at 703-891-4509

If mortgage delinquency has dropped your credit scores below 500, don't worry you may still be able to refinance. No matter how bad your mortgage credit, whether you are 30 days late or in foreclosure, loans for borrowers with FICO scores under 500 for the most part disregard your credit history and focus on using the equity in your home to help you qualify for the refinance.

Certain programs for refinancing below a 500 credit score allow unlimited cash out (up to the maximum loan to value ratio allowed). Cash out refinancing below 500 is very popular for debt consolidation, however the cash may generally be used for any purpose.

Many consumers with credit scores below 500 not only have a lot of delinquencies or late payments on many or most of their bills, but they also will generally have numerous accounts that have gone into collection status reporting on their credit report as well. After you have looked into refinancing to try and get your mortgage payment caught back up when your credit score is below 500, you may even want to consider looking into bankruptcy or some other debt management program if your other debt has gotten too out of control and you have numerous collections that you feel you may never be able to pay back on your own. Filing bankruptcy could potentially help you to clean up your credit and start your credit fresh again. This in turn could help you to increase your credit scores back up quickly and substantially.

Available Mortgage Loan Products

Purchase Transactions including first and second trust mortgages
Refinance Transactions for Rate and Term as well as Cash-Out Refinances
Stand-Alone Second Mortgages (Home Equity Loans -HELOAN and Home Equity Lines of Credit -HELOC)
Construction Loans
Government Loans such as VA and FHA

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FDIC Equal Housing Lender.  Jacob Dean Mortgage 1604 Spring Hill Rd, Second Floor, Vienna, VA 22182. Licensed by the NH Banking Department; Licensed Mortgage Banker, NJ Department of Banking & Insurance; Licensed Mortgage Broker, NYS Banking Department; Licensed by the PA Department of Banking.