Bad Credit Mortgage Refinance

Bad credit mortgage refinance is primarily the process of replacing the original mortgages like bad credit equity home loan, with a new loan that has a lower interest rate and longer repayment terms.

The rate could be lower thus giving you lower monthly payments. As the loan tenure is lengthened and the interest lowered, it provides the borrowers with ample time and convenience to pay off the debts easily. So opting for a bad credit mortgage refinance will put you in a better position than without.

To get approved for a mortgage refinance one must convince the lenders that you are worthy of it by convincing them. For this, one has to improve his credit rating score by paying off the credit card debts, closing unnecessary credit card accounts, paying off the debts, and paying the utility bills.

The borrower should not fail to pay off the original home loan on time in the last 12 months. One who follows the above stand a better chance to qualify for refinance?

A bad credit may be due to unexpected expenses, emergencies, time off of work, hospital bills, big purchases, etc.

Many homeowners with financial problems primarily look into refinancing their mortgage to save money, pay off debts, etc. The process is same for getting a mortgage for a bad credit or good credit. But prior to refinancing, one must be aware of certain things.


The interest rates are generally higher for a home owner with a bad credit than for a homeowner with good credit. The interest rate depends on a number of factors like, amount owed, mortgage payment history and debt to income ratio. But one should bear in mind that attempting to refinance more than 80% of the value of your home will result in a big increase in interest rates.

Also one must remember that a verified loan will usually have lower interest rates and lower mortgage rates than a home loan that is not verified.

Refinancing a mortgage with bad credit involves more fees and closing costs than a usual refinance. Fees for underwriting mortgages with a sub prime mortgage lender are remarkably higher than that in a traditional bank. There may also be loan origination fees, broker costs and private mortgage insurance.

A bad credit home mortgage refinance, is not a mere approach to consolidate the old debts off. Rather, these refinancing options have proved to be a lot advantageous in more ways than one.

1. Home loan refinancing protects the borrower’s property from foreclosure

2. Refinancing makes negotiations with lenders possible. As a result, borrows need not worry a big deal when he is at the threshold of losing your hard earned home. So need to panic at all.

3. Refinancing protects those who possess bad credit history from harassment. Before, borrowers with bad credit history were looked upon with contempt and so for such people the lenders offer loan schemes at very high interests and after collateral of assets like cars, home furnishings and other valuables. But now the scenario has changed with refinancing.

4. Refinancing ensures a better future for the family. Legal notices from lenders, rejection of loan application, etc has a huge impact on family as a hole. With home loan refinancing it has become possible secure a tension-free future for your family.

Before considering refinancing, one should see for sure if it is really necessary. One should take a long hard look at one’s debts. Before resorting to new, and possibly expensive, borrowing have a thorough study of your current financial situation.

Look out for some other ways to clear the overdue amounts. By taking a critical look at the home budget, income, expenditure, see if some of the extra expenses that can be reduced. If so, take quick action and make sure that the extra money drawn from them goes directly towards one of you major debts. If one has several overdue repayments, write to the credit companies concerned and explain about the various steps you are taking to pay off the over due amount.

So, totally, it is not at all a bad idea if you want to go for mortgage refinance with bad credit. This will not only solve the monetary problems but also can improve your credit rating which is important for a secured future.