Choosing to Refinance a Mortgage with Bad Credit

Refinance a Home Mortgage with Bad Credit

Homeowners who are struggling to make mortgage payments every month may find that a mortgage refinance with bad credit can be very helpful. The process of refinancing involves paying off your existing mortgage with a new loan. In most cases the new loan will have a lower monthly payment than the original loan either because of a lower interest rate or longer repayment term.

Refinancing Your Mortgage with Real-Estate-Yogi

A bad credit home loan refinance can be quite advantageous. There are many reasons you may want to consider refinancing your current mortgage including reducing the current interest rate or obtaining payments that fit into your budget better. Fortunately for those who are seeking to refinance a mortgage with bad credit, Real-Estate-Yogi has many lenders who specialize in servicing borrowers for refinancing with poor credit. While it varies from lender to lender, some of the possibilities you will find among lenders include:

  • Ability to refinance in order to obtain your equity in cash
  • Allows both fixed and variable rates
  • Possibility of refinancing up to 135 percent of the home’s appraised value
  • Extended repayment term
  • No hidden fees
  • Many lenders will overlook your credit history
  • Installments lower than your current mortgage payments
  • No down payment required
  • Usually carries a lower interest rate

Good Reasons to Refinance Your Mortgage with Bad Credit

There are several good reasons a person might want to apply for a bad credit mortgage refinance.

  • Increase the term of the loan to better suit your needs
  • Withdraw from your participation in an adjustable rate mortgage if interest rates have increased
  • Lowering the monthly mortgage payment
  • Refinance to consolidate debt and thus spend less on other debt

Qualifying for a Home Refinance Loan

Before you even think about applying for a bad credit home refinance it’s important to make sure you are financially able to make the payments. This means you need to make certain that not only do you have sufficient income but that your debt to income ratio meets the guidelines of the lender. If you don’t meet these qualifications you will be wasting not only your time but the lender’s as well. While you could still be approved for a home refinance with bad credit if you fall outside the normal lending guidelines, it is likely the interest rate will be extremely high. There are five factors lenders consider during the application process of a bad credit refinance home loan as well as with a refinance application from those with good credit.

  • You must have sufficient income to make the mortgage payments, and the lender will also want to know whether that income has a good chance to continue into the future
  • Your credit score is a mitigating factor, and the lender uses this information to determine how likely you are to make mortgage payments on time
  • The debt to income ratio determines whether there is enough cash left for mortgage payments after payment your other liabilities
  • The lender will also be concerned about whether you have enough for a down payment as well as enough cash to pay your mortgage payment in case your income is reduced
  • What is your debt compared to your income?

Why You Should Seek a Refinance Loan with Real-Estate-yogi

One of the primary reasons for seeking a bad credit refinance mortgage is to prevent increases in your monthly mortgage payments as the result of an adjustable rate mortgage. When you refinance you can usually lock in a lower fix-rate which can ultimately lower your monthly payments. You can also use it to decrease the monthly payments on other debt.


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