Real Estate

Bad Credit Mortgage Refinancing

Story Published on July 15, 2008 ⋅  Email this Story ⋅  Print this Story ⋅ Post a comment ⋅

If you are a homeowner with less than desirable credit, you can still refinance your current mortgage with a competitive loan offer. Poor credit will not prevent you from refinancing your mortgage; it simply means you will have to work harder to do it. Here is what you need to get started refinancing your mortgage with poor credit.

Refinancing your mortgage with poor credit is easier than ever. There is an entire industry of mortgage lenders that has sprung up around poor credit mortgage loans. The problem you will find when applying for mortgages with poor credit is that it is very easy to overpay for your new mortgage. Because of this you will need to shop around and compare lender fees, interest rates, and closing costs, along with the terms and conditions from a variety of lenders.

When refinancing your mortgage with poor credit you might be tempted to borrow more than you actually need. Borrowing against your home equity in addition to refinancing your mortgage can cost you a lot of money. Because you will be refinancing your mortgage again when your financial situation and credit improves, it is best to leave your home equity untouched until then.

When comparing loan offers it is important to request the Good Faith Estimate from each lender you consider. Pay close attention to lender fees and closing costs found on the Good Faith Estimate. The origination fees you pay should not be higher than 2% of the loan amount for bad credit mortgage refinancing.

Because you will pay more for the bad credit mortgage you want to make sure that you can refinance this loan when your situation improves without a penalty. Make sure the bad credit mortgage you select does not include a prepayment penalty, or it includes one that expires after a short period of time.

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