Bad Credit Mortgage Refinance: Clearing the Air about Closing Costs

By Gabriel Traverso
Mortgage Credit Problems Columnist

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

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There is no escaping some closing costs, such as the title search, credit check, or appraisal fees. However, even in a bad credit mortgagerefinance, 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.

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