Home Loan Tips: Can You Refinance Mortgage With Bad Credit?

Since the economic meltdown of 2008, many people have found themselves in a precarious position when it comes to their finances. People are in limbo; they struggle to stay afloat by squeaking along and paying their credit cards, car payments and mortgages. Eventually, people in this position can miss a payment or two. Missing a couple of payments results in a lower credit score.

People often wonder about their mortgages. Are they paying too high of an interest rate? Can they refinance and save money? Can they refinance even if they have bad credit? Refinancing with bad credit is possible, but there are certain guidelines you need to follow.

Check Your Credit Report:
It is important to check your credit report at all three of the main agencies: Experian, Equifax and Trans Union. As a consumer, you have the right to check these reports once a year without being charged for it.

You need to check your credit report and look for errors or omissions. If you find any mistakes, then you need to notify the credit bureaus of the discrepancy. Send them a certified letter and include copies of any pertinent documentation you have. When you clean up your credit reports, it is much easier to get the best home loan rates.

Reassess Your Mortgage Payment :
Once you have eliminated the errors on your credit report, you need to compare your present rate with what is available now. Do some research on the internet and figure out approximately how much you will be paying if you choose to refinance. If your new rate is a lot lower than what you are paying now, then it is likely that refinancing with bad credit might be a good idea.

Consider The Fees:
Refinancing is pretty much the same thing as getting a new mortgage. You need to consider factors like closing costs, taxes, escrow fees and fees that go to the government. Write down all these costs; you need to be familiar with them so you can later add them on to the total you owe.

Prepare To Pay A Higher Rate On Your Refinance Mortgage:
If you have bad credit, then it is likely that you will not get the best home loan rates. You probably are going to end up paying more than lowest available mortgage rate. You never know what a lender will offer you until they crunch your numbers and run your credit. It is very possible for the lender to offer you a deal that is worse than what you are currently paying. You need to be careful and crunch the numbers to see if refinancing is a viable option.

Although it may be difficult with bad credit, you can still get a good deal on a refinance mortgage. You need to closely look at all the costs and add them up; this requires a good knowledge of all the numbers. If you find that you will pay less in the future, then it is a smart idea to refinance your home.

Next Property Finance Tips: Effectively Refinance and Reduce Your Mortgage


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