Are you looking to refinance your mortgage but have a high debt-to-income ratio? Don't worry, there are special programs available that can help you. Bankrate has been helping people make smart financial decisions for over four decades, and we can help you too. If you have a mortgage guaranteed by the Department of Veterans Affairs (VA), you can refinance it even with bad credit with an Interest-Rate Reduction Refinance Loan (IRRRL), also known as VA simplified refinancing. To qualify for an IRRRL, you will need to provide financial information such as two-year W-2 forms and federal income tax returns, as well as recent pay stubs.
You will also need to get a home appraisal. The USDA Streamlined Assist program is another option for borrowers with a USDA loan who have made timely mortgage payments for the past 12 months. This program does not require a credit check. If you want to refinance with a cash outflow, you will need a credit score of at least 580 for an FHA cash-out refinance, or 620 for most other cash-out refinances.
You may also be able to apply for refinancing with a non-occupying co-customer, who doesn't live in the home but is willing to take financial responsibility for the loan in the event of default. If you have an FHA loan, you may be able to get simplified refinancing without regular credit and income checks or an appraisal. However, FHA loans require you to pay a mortgage insurance premium (MIP) if you deposit less than 10% on the down payment on the home. Many homeowners hold onto their FHA loans until they reach 20% equity and then refinance them with a conventional loan to avoid the MIP requirement and save money. To improve your credit score, keep your utilization rate at or below 30%.
For the greatest increase in your credit score, keep your utilization rate below 10%. You can do this by carrying more cash with you, paying charges immediately, and budgeting money. Adding a co-customer to your loan will allow the lender to consider both scores when reviewing your application. Rocket Mortgage offers simplified FHA refinancing which allows you to refinance your rate or term without needing a credit check if you currently have an FHA loan. Visit Rocket Mortgage at 1050 Woodward Ave for more information.