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You can still refinance with bad credit, but you will need to
shop around. Each refinance application is looked at on an
individual basis. So even if you have bad credit, other factors
could qualify you for a low interest rate. However, if you don't
apply, you will never know.
Reasons To Refinance
If you bought your home with good credit, you probably found
reasonable rates. But you still may be able to lower your rates
by refinancing. You can also lock in rates by converting to a
fixed rate mortgage.
You can also lower your payments by extending the terms of your
loan. You may also choose to tap into your equity through a
cash-out mortgage. You can use your equity to pay off bills
while writing off the interest on your taxes.
Qualifying For Refinancing
Just because you have poor credit, doesn't mean you can't
qualify for refinancing. You can still use a conventional lender
even if you have missed a couple of payments. And if you have
sufficient equity, most lenders will look at your application.
The government also offers programs if you have made on time
payments on your mortgage. With the FHA's streamlined mortgage
and the VA's IRRL, as long as you are reducing your interest
rates, you can refinance. Most mortgage lenders handle these
types of loans.
Strategies For Refinancing
Once you have decided to refinance, begin researching mortgage
lenders. Do your homework by comparing rates and terms of
several different lenders. When you have found a good quote,
apply. If the lender does deny your application, you can look at
subprime lenders.
Good subprime lenders can offer fairly competitive rates. And
more and more conventional lenders are also working with
subprime financing. You will want to look at their offers and
see if it will work with your situation.
You may also decide to wait and work on your credit record. By
focusing on creating a reliable payment history, reducing debt
load, and increasing cash reserves, you can qualify for good
credit in two years. But before you jump to this step, make sure
you have explored all your options.
About the author:
View our recommended Bad Credit Mortgage Refinance lenders. Carrie Reeder is
the owner of ABC Loan
Guide, an informational website about various types of
loans.
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