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How do I Refinance with Bad Credit?

Article Details
  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 14 June 2018
  • Copyright Protected:
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    Conjecture Corporation
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Refinancing a mortgage, which involves repaying a loan and creating a new loan, may help you obtain a lower interest rate and possibly even better loan terms. If you are hoping to refinance with bad credit, you may do well to start by checking your credit report and having any outdated or incorrect information removed. Then, your next step may be searching for lenders that specialize in bad credit refinancing. Once you've compiled a list of lenders willing to work with borrowers who have bad credit, you may compare lenders and the terms they offer to choose the loan that is right for you. Essentially, this means selecting a lender willing to refinance your mortgage despite your bad credit, offer the lowest interest rates, and provide the most attractive loan terms.

If you want to refinance but have bad credit, you may wonder whether you'll have difficulty. The fact of the matter is you may have to put more time and energy into finding a lender willing to work with you and offer a good rate. This task is not impossible, however. In fact, there are some lenders who specialize in helping people who want to refinance with bad credit.

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As you prepare to refinance with bad credit, you may do well to obtain a copy of your credit report and examine it carefully. You may note adverse entries on your credit report that you know are legitimate as well as some that are not valid. For example, you may see mistakes on your report or even entries that are outdated and should be removed. Additionally, you may do well to make arrangements to pay off as many of the bad debts listed on your credit report as possible. In doing so, you may do well to negotiate with creditors to have credit report entries changed to say "paid as agreed" or "paid."

After you’ve done what you can with your credit report, you may begin your search for a mortgage refinance lender that will offer you good rates and terms despite your bad credit. There are many lenders that advertise their willingness to help borrowers refinance with bad credit, and you may do well to start your search with them. You’ll typically want to choose only the most reputable lenders and compare them based on their reputation for dealing with borrowers ethically and the rates and terms they are willing to offer you based on your unique credit score and financial situation. In the end, you’ll likely want to select the lender that is willing to grant your refinance loan with the lowest interest rates, lowest refinance fees, and best repayment terms.

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