If you have poor credit and are looking to refinance your home, you should know that it is not impossible. There are many lenders such as specialty bad credit mortgage brokers and bad credit mortgage loans that you could qualify for.
Bad Credit Mortgage Refinance
Mortgage companies are hesitant to give mortgages or refinance loans for people with bad credit. To assist with this situation, there are bad credit mortgage lenders and bad credit mortgage brokers.
Bad Credit Specialists
The bad credit mortgage lender is there to help someone get a borrower’s loan approved even if they have poor credit. Unfortunately, the loan you get will carry a higher interest rate and have higher closing fees then someone with better credit. Often these bad credit home mortgage loans will carry a pre-payment penalty that will last for anywhere from 6 months to 3 years and mean huge sums of interest for at least 6 months before you can pay the loan off.
A bad credit mortgage broker is a middle man, much like a normal mortgage broker. This person will be able to find the best bad credit mortgage lender to facilitate refinancing or purchasing a home.
Bad credit mortgage refinancing on a bad credit mortgage loan can still save the borrower hundreds, if not thousands, of dollars in the long run and term of a loan. This is money that during financially trying times can virtually give families enough money to live life better than before.
Bad Credit, The Bottom Line
Utilizing either of the above specialists can help a borrower find a company that will refinance a home regardless of the credit score. The process is much like getting a bad credit home loan where they will want to take a look at the borrower’s credit report, employment history, income and the amount of debt the borrower might have. In a bad credit situation though, the lender might also look at the amount of available cash. The lower a borrower’s credit score, the more available cash must be on hand to compensate on the home loan. If you have the cash, reserve a down payment of 20 -25 percent is not unheard of because if you can put down a high percentage down payment, you will pose less of a risk to the lender. With a large amount of money already invested in the property being bought, they will feel like it is less likely that the borrower will default on the loan.
If you are looking for a subprime lender for refinancing it is important to get references and to be extremely careful. These subprime lenders have experience in working with people who have bad credit, but for every legitimate subprime lender there are disreputable lenders and mortgage brokers looking to prey on those with poor credit scores. These lenders might offer mortgages with outrageous terms buried in the fine print of the contract.
A Second Mortgage with Bad Credit
The same holds true with attempting to get a bad credit second mortgage. Once again, there are brokers and lenders out there looking to take advantage of those in need. There are other reputable companies to go to though. It is important, when looking to get a second mortgage, to have all the information required. Most of the time, you should be sure that your credit score is accurate, pay stubs from your job to verify income, deposit slips, etc. More often than not, getting a bad credit second mortgage will rest on the proof of steady income. Once again, it is important to shop around for the best deals out there. No borrower should be embarrassed about bad credit and should speak to as many lenders as possible to find the best company that can help.
Bad credit is not permanent and with some hard work can often be turned around. The important aspect of looking for a bad credit second mortgage, mortgage or refinancing is to make sure that as a borrower, the debt will not be insurmountable.