How to Refinance a Mortgage with Bad Credit
Most people assume that because they have bad credit, they cannot refinance their mortgages. In many circumstances, however, this is not true. Remember, there are always risk takers who would just love to give you a mortgage, plus, once you have a mortgage, and you pay it on time each month, they still have to hold your mortgage. Just because you are not paying other debt on time, or just because your credit history has changed, does not mean that a mortgage holder can suddenly call in your mortgage without cause. In this article, we are going to review how to refinance a mortgage with bad credit.
Refinancing a mortgage with bad credit usually means finding high risk lenders who specialize in bad credit scenarios. Generally speaking, these are not your regular, everyday financial institutes, although, some do advertise all types of credit welcome. The truth is, though, that banks, in particular, are not going to take you seriously if you apply for refinancing. The exception to this is if you already have your mortgage with the bank. If the term on your mortgage is expiring, and you are required to re-sign, then as long as your mortgage account is in good standing, the bank is going to continue to mortgage you. On the other hand, if you are looking to benefit from a special promotion at the bank, and you have bad credit, you may as well start looking elsewhere.
The key to refinance a mortgage with bad credit is thinking in advance. While you may have damaged your credit rating in the past, work at improving your situation, so that you can at least show an honest effort when it comes time to refinance. One of the ways you might do this is by obtaining a
secured credit card with a very small limit. Even having a two-hundred dollar limit with payments being paid on time each month will be an advantage. Another way, is to closely monitor the companies that report to the credit bureaus. If you have bills that you pay on a regular basis, and the companies report those payments, why not keep those up-to-date, so that you have another mark in your favor?
Furthermore, it is important for you to review your credit reports from all three bureaus. In case you are not familiar with them, they are Equifax, TransUnion and Experian. Each one reports differently, and each can have varying information on your report. Consequently, it is crucial to check all three. There may be negative comments on one report, whereas the other two may have accurate information. The problem is you have no way of knowing what company or report the lender uses, so you need to be aware of potential problems in advance. By finding out about negative issues or inaccurate information, you can work to fix these problems before you apply to refinance a mortgage with bad credit.
Finally, believe it or not, there are plenty of mortgage institutes and individuals out there who will refinance a mortgage with bad credit. It may take you some time to find the right person, which is another reason to start looking early, but you can find private lenders. What you should understand, however, when you have bad credit, you must expect to pay higher interest rates. Therefore, your payments are going to be higher as well. Benefits are only awarded to those with top-notch credit, but that does not mean that you will be turned down. It just means that you will pay premiums.
Refinance Mortgage TipsSource: www.refinancemortgagesite.com