By Richard Barrington
Mortgage Credit Problems Columnist

Here's an optimist's view of the mortgage crisis: for all the trouble the mortgage industry is going through now, it will emerge from these troubles in sounder shape than when housing was booming and lending standards were allowed to slip toward the ridiculous. That view of the future may be cold comfort for people with bad credit who are unable to refinance in the meantime, but those people too can look at this as an opportunity to shore up their finances and get a little wiser about mortgages.

Mortgage Industry in Better Shape?

One of the ways that the industry will emerge in better shape is that the slowdown in mortgages will sift out the lending officers and other employees who were never really serious about the business. The mortgage crisis is the kind of industry shakeout that tends to leave behind the more committed professionals.

As for your individual situation, if you have bad credit now, your mortgage refinance options are going to be limited for the time being. However, you can use this time to start improving your finances, and learning a little bit more about how the refinance process works. This should start with a conversation with your current lender, and then move beyond that to explore other options.

Current Lenders May Look Past Your Bad Credit for Mortgage Refinance

Your current lender should be your best hope of refinancing, simply because that lender has already taken on the risk of your bad credit. It may be in its best interest to help you refinance to make your mortgage more manageable. If the lender can't do this, someone should help you understand what the roadblock is. For example, if the problem is that your house has declined too much in value, someone should be able to tell you how much you would have to pay down or how much your home would have to appreciate in order for you to refinance.

Experienced Lenders Can Help You See Where Bad Credit Trips You Up

Mortgage refinance lenders who haven't worked with you before may have their hands tied right now if you have bad credit. Then again, with both refinance and new mortgage business slow, they might be able to share some insight with you that helps you understand the approval process. For example, they can at least tell you how close you are to meeting their lending standards. Knowing what you need to improve will give you monitoring points to check on as you improve your credit. By using knowledgeable resources within the industry, everyone can emerge from this crisis a little wiser.

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