The new refinancing program of the Government’s is meant to help out homeowners pay more affordable prices for the housing economy. The refinancing program does have certain stipulations in place, like all finance bills that are passed by the government. The original hope is that the government program can make it easier for homeowners to keep their heads above water when they owe more on their mortgage than their home is actually worth.
Government-backed loans tend to be last resorts, though they may sound like great options. They should not be used by people who are keeping up with their payments and want to look for cheaper options. Rather they are made for people with a lower credit score than 700 who are really hurting financially.
People who are using the refinancing government plan are people who are having severe financial difficulties and problems. Lenders are able to provide refinancing options to homeowners, but it is at a cost. That is why it is important to only take advantage of this system if you owe more on your loan than the home is now worth because of the huge plunge in the housing market.
However, this program comes with a cost. Your credit score will take a plunge anywhere from 100 to 150 points on average. This is why it is important to only take advantage of it is you are under severe financial difficulties.
Is it surprising that the program will hurt your credit score? Not really. If you read the stipulations and understand the way refinancing works, it should not come as a surprise. The surprise comes because the government does not freely give you information regarding the lowered credit score unless asked – and sometimes not even then.
What are things you should do when faced with this type of decision? First, know what your credit score currently is. Get a credit report before you make a decision to use the government program.
You do have the option of refinancing on your own. You may also want to try for a regular refinancing loan. A regular refinancing loan should not hit your score as hard as the government assistance refinancing program would.
Also, when you receive your credit report check to make sure everything is accurate. If there are any problems that you see, get them fixed. Hire a credit repair company to dispute any misleading credit line information, and help you repair any damage that is done.
At Nitro Credit, we specialize in credit repair, credit help, improving your credit score, and credit restoration. We will help you start over and help increase your FICO score.
