By Richard Barrington
Mortgage Credit Problems Columnist

It can be a classic catch-22: you know that refinancing your mortgage could be the key to improving your finances, and yet bad credit mortgage refinance has become especially challenging. What is the key to unlocking this puzzle? The answer may be a question of your lender's expertise in bad credit refinance situations. Refinancing can help ease the burden on a monthly budget in a number of ways. Unfortunately, no matter how sound your reasons for refinancing, bad credit refinance has become more difficult as mortgage institutions have tightened borrowing standards. Often, the right lender representative can make all the difference in overcoming the obstacles.

 

Obstacles to Bad Credit Mortgage Refinance

Some of the obstacles to bad credit mortgage refinance include the following:

 

• Lenders no longer welcome bad credit refinance loans the way they did a few years ago. Too many lenders have been burned by bad credit loans and can't afford to take them on any more.
• As credit concerns rise, interest rates for bad credit refinance loans increase to a greater spread over prime rate loans.
• Closing costs may also be more expensive for bad credit mortgage refinance loans. This is not simply a matter of making people pay for their bad credit--there may well be more upfront research required of the lender in bad credit refinance situations.
• Mortgage scam artists are especially attracted to bad credit refinance situations, giving borrowers another risk to look out for.

 

Why Expertise Matters

In this environment, the expertise of your lending representative matters more than ever. Here are some of the ways this expertise can make a difference:

 

• A loan officer experienced with bad credit refinance can advise you on ways to improve your credit score, and how this can affect your loan interest rate.
• A good loan officer also understands the business priorities of his or her organization, and should be able to tell you upfront how receptive they are to bad credit refinance at this time.
• A loan officer with a good track record will have credibility within the organization, and that could tip the scales in favor of approval of your loan.

                         

Finding Expertise

How do you find this expertise without being an expert yourself? Make the effort to talk to a few lenders. Your first clue should be how willing they are to take time with you. Then, just ask questions. The more your loan officer can give you plausible, understandable answers, the more confidence you can have in their expertise. Finally, don't be afraid to ask for references.

Other Recommended Refinance Articles

• Five ways to know if you should refinance
• 5 tips for prospective home refinancers
• 2 ways refinancing can help your finances