When you have a bad credit history, a mortgage refinance is most likely the cheapest way to access credit. Depending on the homes value and your equity in it, you can get a cash out refinancing for bill consolidation or home improvements. Or, it is possible to obtain a lower interest rate, and lower your monthly payments. Follow these 3 steps to get the best mortgage refinancing deal you can:

1)Compare Interest Rates
Before signing a mortgage refinancing deal, be sure to compare interest rates between lenders. This should give you a rough idea of what you can expect, and how much you can borrow. The lower the rate is means the more you can borrow for cheaper, which ultimately results in savings. This also allows you to find a better lender, who is offering you a better deal.

Also, make sure that potential mortgage lenders do not access your credit report. Too many people looking into your credit can result in a lowered credit rating. Typically, there is no guarantee on what other lenders will quote you, however, it will give a good idea of where you stand, especially if you know your credit score and tell it to them.

2)Know the details of your Credit Report, and clean it up a little
Before you apply for a mortgage refinancing, make sure you are familiar with your own credit history. Checking for mistakes or inaccuracies can save you a lot of time and hassle. You may even see that your credit is not as bad as you though it was.

If you have the opportunity to pay off small lingering debts, or reduce the cards which are nearly maxed out, this can help. Having your debt spread among a few accounts is better than having accounts maxed out.

3)Get Better Mortgage Terms, Conditions, and Interest Rates
Typically, homeowners who want to refinance, but have a low credit score, need to use a sub prime mortgage lender. These lenders specialize in these loan types, and can often obtain a better interest rate than a traditional bank or mortgage lender. ARM (Adjustable Rate Mortgage) loans typically offer the lowest interest rates. There is a risk though that the ARM will increase, and therefore your mortgage payment goes up.

Always listen and ask about all of your mortgage lenders loan options. Sometimes, you may find one you were not aware of that better meets your financial needs. Something like a chance to refinance your mortgage again in 24 months should your credit improve would be an example of a refinancing option.

Homeowners looking to get a mortgage refinancing today need not really whether or not they will get approved. They should be concerned with what lender or bank is offering them the lowest rate possible. Lower interest rates are truly how a refinancing is the most beneficial for a homeowner.

-M Petrone

Subscribe via email

Enter your email address:

Delivered by FeedBurner