How to Get Mortgage Refinance for Poor Credit If You Are Self Employed

Finding the home of your dreams and then actually owning one is a fairytale for most of us. But there are chances that your credit score and credit history are blemished and you are finding yourself in a tricky situation. The good news is, in today’s economy, more and more people are experiencing financial problems, and hence, the financial sector has begun to tailor products that are designed to help you even when you are struggling with bad credit and poor credit score. One such policy is mortgage refinance for poor credit.

Getting a mortgage that suits your financial abilities is anyways difficult; on top of that, if you have a poor credit score, things become more tricky and testing. But that in no way means that you can’t get approval for a mortgage with poor credit rating. With thorough research and appropriate mortgage advice, guidance in improving your credit ratings, you can land on your dream mortgage with the best-suited rate.

Reasons for Poor Credit:

  • You have been late in paying credit card bills in the past or have a huge unpaid amount.
  • You have no credit history putting your reliability and credibility in jeopardy.
  • You have been declared bankrupt, which burns your credit score to ashes.
  • You have County Court Judgements against your name.
  • You have a debt management plan.

Getting a Mortgage with Poor Credit: 

Check your credit score before applying for a mortgage, to see where and how you can improve your credit rating. In the United Kingdom, it’s the legal right of a person to request their credit report. So you can check for errors and rectify them.

Improve your reliability: Start paying off any debts that you owe and make sure that your credit cards are not at their full limit. You can also improve your reliability by paying back debts in full amount each month on your credit cards. Discard off the cards that you no longer use.

Be on the Electoral Register: This slightly improves your credit rating since the lender can easily carry out certain precautionary checks and prevent fraud.

Credit Rating of your spouse: The credit rating of your spouse has a huge impact on your rating, so in case your spouse has a poor credit score and a blemished credit history you can be refused mortgage on its basis. Hence, if you no longer stay with your spouse it’s advisable to seek financial advice on how to remove their poor rating from your credit report.

What Is Mortgage Refinance For Poor Credit?

If you have a loan that’s too expensive or too risky to live with, you can often refinance into a better loan. Refinancing is the process of replacing an existing loan with a new loan, allowing you to shift the debt to a better place. The new loan pays off the current debt, so that debt is not eliminated when you refinance. However, the new loan should have better terms or features that improve your finances. The most common reasons for refinancing include saving money on interest costs by refinancing into a loan with an interest rate that is lower than your existing rate, shifting to lower monthly payments, extending or shortening the time period of repaying your loan, consolidating multiple loans into one, paying off balloon loans and changing a variable rate loan into a fixed rate loan. Therefore, in case you feel that you are fighting with poor credit rating, you can make the shift to mortgage refinancing and get rid of your financial obstacle with poor credit refinance home loans.

What is Self Employment Mortgage Refinance?

Qualifying for a mortgage loan can be difficult if you’re self employed, especially if you report your income on Schedule C for federal income tax purposes. It is indeed difficult but not impossible. So here we list a few does for self employed professionals seeking mortgage:

Prepare all your information and be ready to provide more than the standard documentation. Ask your tax preparer for a letter on his or her letterhead stating how long you’ve been in business. Another helpful document may be a Profit and Loss (P&L) statement prepared by you or your accountant. A P&L shows your business’s income and expenses during a specific time period.

You can amend your tax returns to show more income but then you need to provide both the before and after versions as well as a written statement that explains the changes you made, the reasons for the amendments and proof that you paid any additional tax that you owed as a result.

Expect to be Googled.  Have a professional website or online presence that shows your business is legitimate.

Be responsive and acknowledge every request from your lender as soon as possible, even if it’s just to say you received the request and will comply as soon as you can.

Remember, the paperwork can be a hassle, but in the end, you are getting a new mortgage loan with the best-suited rate. Self employed mortgage refinance is not easy but with proper guidelines, paperwork and thorough time input you can definitely land on your dream policy. Shop around, ask questions and discuss your personal situation with your mortgage lender before taking the final call. 

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