Having bad credit is no fun. But cheer up, America does not have debtor's prisons like in Jolly Old England, and there are credit repair and restoration programs galore. The good news is, if you're still dreaming of getting a home loan, you can find lenders that will work with you. Whether you're looking for bad credit refinancing or a poor credit second mortgage, you may have to absorb higher interest rates. If possible, you should shop around.
Researchers say it's hard these days to profile a person with bad credit. That's another reason to not take your situation too hard. Six billion Americans received new credit card offers last year as the national consumer debt topped $2 trillion. That being said, what can you do personally to afford a bad credit mortgage refinance, and at the same time restore your poor credit to the pink?
Bad Credit Refinance Options
Search the lenders you find online for competitive rates. A bad credit mortgage refinance loan can help consolidate your debts AND swing your credit score into higher numbers. The so-called short-term pain of the rate will more than pay off in the long term. And you may not have such a high rate.
If you're borrowing more than eighty percent of the fair market value of your home, a lender may ask you to attain Private Mortgage Insurance (PMI). PMI can definitely lower the interest rates on your poor credit refinance, but the amount is not applied to equity.
If you do have to accept the PMI, remember that once you have 20 percent invested in the principle, you can ask for a reappraisal to remove the PMI. It won't affect your low interest rate if you do!