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Poor Credit Mortgage Refinance - Refinancing Your Home After Your Credit Score Has Dropped

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.