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Escape Bad Credit with a Home Mortgage Refinance

By Sonja Albrecht
Mortgage Credit Problems Columnist


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Over 40% of American families spend more money than they earn, and the average household has nearly $10,000 in credit card debt. A bleak picture? It doesn't have to be. With bad credit mortgage refinancing, you can borrow your way out of debt.

Refinancing Rescue

And you're not just taking from Peter to pay Paul. Any homeowner who purchased before mortgage rates began to fall has the potential to obtain better terms by refinancing the original mortgage. As long as market rates stay down, even bad credit refinancing can offer interest rates lower than the standard mortgage rates of days past.

Cash-Out of Debt

In addition to landing a better rate, homeowners with bad credit can use mortgage refinancing to raise cash. Cash-out refinancing allows a borrower to refinance for an amount higher than the current principal balance on the original mortgage. The extra funds land in your pocket. But not for long: debtors will want to use that cash to pay off or pay down high-interest bills like credit cards.

The Choice is Yours

If your original mortgage was a bad credit home loan, chances are you'll benefit from a bad credit refinance. If your credit was much better when you took out your original loan, however, it might make sense to hold off until you repair your credit. Consult a financial advisor or loan officer to determine whether it makes sense to act now or wait until your credit improves.

Finding a lender for a bad credit home mortgage refinance is not difficult. Mortgages are collateral-based loans, meaning your home equity offers the lender security against default. Refinancing is almost always an available option for homeowners with bad credit--and for many, it can be a lifeline out of debt.

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