A very common misconception right now is there is no money available for home loans.  There is money – both for buyers with strong credit and for folks with so-so credit who are thinking about refinancing to take advantage of great rates.

I just talked with a really good lender and asked him what the chances are for someone to refinance whose credit is under 600 (like in the 580-590 range).  He asked if they’ve made their house payments on time for the last 12-months.  The answer was yes and no… the person has never been late on a payment, but did negotiate a smaller payment one month when money was super tight.  They paid the difference over a few months so the lender received all of it.

IF the lender did NOT turn the person as a late payment and if the loan was FHA, then they *can* refinance at a much lower rate (they’re in at 7.5 percent now) going FHA to FHA.  It all depends on the credit report.

If you find yourself in this type of scenario, contact a couple of local lenders even if you think your credit score is too low right now.  With a good 12-month history of mortgage payments, you may be able to get a refinance at a lower rate… and from 7.5 percent to a 5.5 percent rate, you’ll save HUNDREDS of dollars each month on your mortgage. It’s definitely worth a phone call.