Bad Credit Mortgage Refinancing: Just one option

By Andrew McAllister | March 8, 2008 | Popularity: unranked (?)

Individuals with poor credit were prevented from applying for a first mortgage loan in the past if they had bad credit. Mortgage companies would avoid approving a loan to applicants with poor ratings. Those who already owned a home could not qualify for a mortgage refinance loan. Increasing competition in the market today has led to more options for people with a poor credit history.

A smart move is to consult with a mortgage adviser who specializes in people with low credit scores. There are fewer options available to people in this position, but an adviser is often aware of possibilities the average lender may not be aware of.

In addition, it helps to know what the mortgage company is going to base their decision on. Take advantage of your right to receive a free copy of your credit report every year – and don’t be taken in by companies who offer a “free” with a subscription to their service, they are absolutely unnecessary. By comparing your most recent credit report to those in the past, you will know if your credit is improving, remaining stable or getting worse.

Just because your credit rating is low does not take away the right to dispute information on your credit report that might not be accurate. Mistakes happen every day and by disputing those errors, your credit rating will often increase. Items on your credit report will no longer show up after a period about ten years (7 years in some countries). Bankruptcies will disappear over a similar time frame.

When speaking with a bad credit mortgage adviser it is very important that you are open and honest about your financial situation. Bad credit mortgage refinancing is a tricky proposition and your adviser will be better able to help you if they know exactly where you stand. Otherwise you are at risk of not getting the best possible mortgage refinance loan for you.

Discuss all options with your mortgage adviser. If you do not understand the information, ask them to clarify. Bad credit mortgage refinancing can be confusing. Never act like you understand something if you do not! You always have the right to decline signing on the dotted line.

Your individual credit situation will of course dictate your options to a certain extent, but bad credit doesn’t mean you are without choices. Your interest rate is going to be higher than someone with good credit, but I’m sure you expected as much. Fixed rate mortgage refinancing loans will be harder to get, but with adjustable rate mortgages (also called ARM) and hybrids you will find an option that works in your situation.

Final word: Don’t do anything you aren’t comfortable with. Trust your instincts and always read the fine print. If you are still confused, ask a trusted friend or family member to have a look and offer their opinion. You don’t have to make the decision alone.

Interested in mortgage refinancing? Check out www.allaboutmortgagerefinancing.com for the latest news and information about refinancing mortgage with bad credit and other related topics.
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