Knee-Deep in Debt and Bad Credit Doesn't Mean You Can't Refinance

Many homeowners become immobilized by fear and think they can't qualify for a loan because of bad credit. The truth is that life happens--emergency medical bills may have begun the cycle of bad credit for you--but there are things you can do to improve your bad credit and refinance your loan.

The important thing to keep in mind with bad credit is that lenders want to make you a loan--you just have to find the right kinds of lenders that can work with people with poor credit. You can't sit around and wait for your credit to magically improve, or hope that time will cure all ills--you need to take action. If you want to make home improvements, don't let your bad credit prevent you from applying for a mortgage refinance.

The First Step to Improve Your Bad Credit

The first thing you can do towards your goal of a mortgage refinance, and forgive me if this seems obvious, is to find out exactly how bad your credit really is and why. Go online to one of the credit agencies and get a free credit report. Check your report thoroughly for accuracy. There are countless cases of people who found and disputed mistakes on their reports, making significant headway on improving their bad credit.

Pay Off What You Can

Any small debts you have you should pay. The little amounts can really add up, but they are also one of the easiest places to start in improving your credit. Try to pay your credit card bills down to less than half of the card's limit. This helps prove to lenders that you are not already over-extended.

Take Action

By making these small strides to improve your situation, you'll be better able to qualify for the loan for which you've been looking. Bad credit will not totally prevent you from qualifying for a mortgage refinance. If you want to refinance your mortgage but have bad credit, the worst thing you can do is nothing.

Bad Credit Mortgage Refinance: Clearing the Air about Closing Costs

Closing costs are one of the biggest sources of confusion and many homeowners, while thinking they might be paying more than they need to, fail to speak up and try and negotiate. You can negotiate closing costs in a bad credit mortgage refinance.

If you have bad credit, you might be feeling a little desperate and may not be as inclined to make noise or ask questions when applying for a mortgage refinance. You might be dealing with lots of stress and thinking more about your next move than about saving a few hundred dollars.

Bad Credit Refinances Often Have Extra Fees

There is no escaping some closing costs, such as the title search, credit check, or appraisal fees. However, even in a bad credit mortgage refinance, some fees can be negotiated:

Points: up front fees that are paid in order to get a lower interest rate.
Attorney's fee: this fee is not applicable everywhere.
Application fee: most lenders will charge this but it can be waived.
Doc fees: where many lenders try to pad their fees.
Appraisal fees: paid for appraising your home. Don't agree to these until your credit been approved and you have been given a firm rate commitment.

Ask questions about the fees involved in your loan and ask what can be negotiated. Don't forget to shop around with different lenders.

Your Mortgage Refinance Doesn't Need to Be a Mystery

Remember that while you may really want to get the loan, the lenders are fully aware that they are competing for your business. A bad credit refinance doesn't mean you don't have the right to save yourself some money. Your loan officer is not only guiding you through the process to get you the mortgage refinance you need, he or she is also conducting business. If you don't speak up and ask questions, you might miss the opportunity to save some money.