Bad Credit - Refinance

Bad Credit Refinance
Bad Credit Home Loan Mortgage Refinance

One of the best loan options available for homeowners who have bad credit is to try and get home loans through mortgage refinance. Lenders will often make loans to home owners who have equity in their houses and a history of making mortgage payments on time even if they have bad credit.

Lenders are likely to overlook bad credit in such a situation because the home itself is being used as collateral for the loan. They can foreclose on the home if the home loans are not paid off. Homeowners with a good history of paying their mortgages will be even more likely to get such loans.

Homeowners should note that lenders may charge those with bad credit a higher interest rate on such loans. This means that borrowers should try to raise their credit scores before applying for such a loan. Even a few extra points on a credit score can get you a better deal on a home loan.

Where to look for a home loan with bad credit

The first place to look for a home loan if you have bad credit is with the holder of your present mortgage. Since you have a history with your mortgage company they might be willing to overlook a bad credit history, particularly if you have a good record of making mortgage payments. Contacting your mortgage lender should be the first step in your search for mortgage refinance.

Another good place to look for deals on mortgage refinance is the internet. Lots of mortgage lenders advertise on line and are fairly easy to deal with. One advantage to going online is that the process is fairly fast and simple. Another advantage is that you can locate better mortgage deals than those in your area.

Be careful when applying for a mortgage online

One thing to keep in mind when you search for a mortgage or mortgage refinance, is that most mortgage lenders run credit checks on new clients. Running a credit check can cause your credit score to go down. Having several checks run could make your bad credit worse, so be very careful when filling out online applications.

What refinancing can do for you

One great advantage to refinancing is that it can lower your mortgage interest rate and the amount of your mortgage payment. Lenders may be willing to give you both refinancing and a home loan. When you apply for refinancing ask the lender if they can refinance your entire mortgage at a lower rate.

The amount of financing available to you could be limited by the present value of your home. Home loans are based on equity which is the value of your home above the amount it is mortgaged for. If the home is worth $200,000 and amount owed on the home’s mortgage is $100,000, the homeowner has $100,000 worth of equity available. The reverse is also true, if the amount owed on the mortgage exceeds the home’s value, no equity will be available.

It is entirely possible for the amount owed on the mortgage to exceed the value of a home. In such a case, no equity will be available to the homeowner. Homeowners should be careful that they don’t end up owing more than home is worth when they are looking into refinancing and home loans.