Should People Consider A Bad Credit Mortgage Refinance?

When people have trouble making their mortgage payments, they sometimes shop around for a refinance. The problem with that is that depending on their credit, the refinance doesn’t always help them to improve the amount they’re paying. Doing a bad credit refinance isn’t exactly going to get your prime rates.

My advice to a person that really needs a refinance would be to stall for at least a few months. During that time period you should be able to pay down your revolving credit and that will help to get your credit score into a more reasonable range. This can help your credit score by as much as 35%, but you may still have issues if late payments are also bringing down your score.

Once you have done what you can to improve your credit score, it’s time to start comparision shopping. You need to compare between the lenders that you’re considering, and also between your current options and the existing loan terms. You should never go from a fixed rate loan to a variable rate, even if it’s going to be cheaper in the short term. By looking at an average five year period you’ll find that you’re going to end up paying a LOT more money.

Chances are, it’s not going to make sense to refinance with bad credit. It will end up costing you a ton of money. However, I understand that sometimes emergencies happen and you may not have any choice. If that’s the case for you, shop around well so that you can make sure to get the best deal. Better yet, get your parents or a friend to cosign so that you can get a much better interest rate.

This might not be what you’re looking for. I’m sure that many of you want to find a bad credit home mortgage refinance with 3% interest. That honestly isn’t super realistic in fact improving on the loan you already have probably isn’t realistic.

Maggie out.