With a 100% mortgage refinance, you can borrow against the value of your home and, hopefully, lower your interest rates. For a cash-out refinance to go through, you need to have great credit. If not, you will need to work with a subprime lender or apply for a line of credit.
What Refinancing a 100% Mortgage Can Do
With a 100% refinanced mortgage, you can take out all of the equity in your home. When you cash out some of your equity, your rates to refinance will go up. But the interest rates will be less than if you got a second mortgage.
But since you don't have any equity, you'll have to pay for private mortgage insurance. But you don't have to worry about paying premiums if you choose a subprime lender.
How to Make Your Application Better
Lenders care most about whether or not you can pay back the loan. If there is no equity, lenders look at things like income, cash assets, and credit history. When you compare your debt to your income, your income is important. Having other debts, like credit card debt and student loans, makes it harder for you to borrow money. So, if you can, try to get rid of or cut down on your debt.
Lenders want to know that you can make your monthly payments even if you lose your job or have some other kind of financial emergency. This is why cash assets, which include CDs and money market accounts, are so important. Having enough money for six months is a good start.
Your credit history shows how likely it is that you will miss a payment. But even if your credit isn't perfect, a sub-prime lender will give you a loan for the full amount. They will also be less strict about your application, but they will charge you a little more.
Getting Better Terms
When you close on your refinancing, you should be ready to pay at least 3%. If you don't pay them, they will be added to your new mortgage, and you will have to pay more interest on that money.
You should also look into loan options before making a final choice. By doing research, you can be sure you're getting the best loan deal. Don't just look at the rates; also look at the closing costs. Also, keep in mind that you might get a better deal if you take out a second mortgage to get at your equity.
