Refinance Your Mortgage with Bad Credit: Four Steps to Success

Getting a mortgage refinanced with bad credit is possible. However, there are four important steps that you need to take to make sure that you get the best deal in the process.

The recent housing crisis and the predatory lending that went along with it have led many homeowners to look into the possibility of refinancing their current mortgages in order to make payments more affordable. However, the flip side to trying to accomplish this feat is that the same crisis has made many of those same homeowners’ credit scores plummet. Trying to refinance a mortgage with bad credit is no simple task. However, there are simple steps that you can take to increase your chances of getting the refinance loan that you need.

Step 1: Know Your Credit

Before you move any farther in the quest for a mortgage refinance with bad credit, you first need to understand why your credit is bad in the first place. What elements of your financial past have made your credit score so low?

The way that you accomplish this is through obtaining a free credit report and reviewing it in its entirety. Do not be afraid to seek help from a financial professional in order to make sure that you understand your credit report. This way you can figure out what actions you need to take to restore your credit and whether or not all the points against you are legitimate and not a case of stolen identity.

Step 2: Concentrate on Actions

When you go to talk to a lender about any kind of loan the reason that he pulls up your credit report is so that he can get a feel for you in terms of financial responsibility. Do you pay all your bills on time? Do you have more debt than you can manage? Make sure that you give him no reason to worry about your ability to repay your mortgage refinance loan.

With bad credit, it is easy to assume that all lenders care about is the score they read, but that’s far too simple. Instead they want to see whether or not the circumstances that led to the bad credit score are still in effect. You can make changes today to make sure that is not the case.

Step 3: Find the Right Lender

After you are confident that you can present yourself well to any lender you talk to your next move is finding a lender that can help you refinance your mortgage with bad credit. It is wise to talk to the current lender holding your home loan first. In order to keep your business, he may be willing to negotiate your interest rate or change your loan’s terms.

If this option does not work, then your next best bet is to talk to lenders who specialize in working with those who have bad credit. Generally, these lenders can be found online and many may offer debt counseling services as well that can help you get all of your affairs in order before taking on a mortgage refinance loan with bad credit.

Step 4: Be Patient

The best way to get the mortgage refinance loan that you need is by being willing to wait. You need to talk to several lenders in order to compare quotes for interest rates, terms, and other fees. Do not accept the first offer that you see because something better may be out there. Take your time and evaluate each offer honestly. Seek out the help of finance professionals or trusted family and friends.

It is possible to refinance your mortgage with bad credit. However, there are important steps that you need to take in order to make sure that you can do it to the best of your ability.

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