Borrowers with Bad Credit Can Try These Mortgage Refinancing Tips

By Michele Lerner
Mortgage Credit Problems Columnist

Homeowners with bad credit may feel that attempting to take advantage of mortgage refinance rates is hopeless, but even borrowers with less than perfect credit should apply for mortgage refinancing. Even with bad credit, mortgage lenders are still available to assist individuals whose FICO scores have taken a hit due to job loss, lower wages, or medical or family problems.

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How to Qualify for a Bad Credit Mortgage Refinance

Homeowners with poor credit can take several steps to improve their ability to obtain a new home loan, starting with completing the form on this site to see the what mortgage rates are available. Comparing rates and fees can help homeowners with bad credit refinance to lower their monthly payments and begin repairing their credit.

Here are some other steps you should take:

  • Check your credit report for accuracy. A bad credit score may be improved by removing any inaccuracies.
  • Pay all your bills on time in the months leading up to your mortgage application. Your credit score can rise with on time payments, even if you can only afford to pay the minimum due.
  • After filling out the form on this site, make sure you follow up within 30 days. Mortgage rates can change dramatically in a short period of time, so if more than a few days have passed, find out if your rate is still valid. Compare rates from at least three to five lenders to find the best deal.
  • Look into an FHA-insured mortgage, which allows for lower credit scores and higher debt-to-income ratios.
  • If you have the cash to pay down your debts, pay some off before applying for mortgage refinancing.
  • Negotiate your closing costs. You can save money on some items at the closing by asking your lender and title company for better fees.
  • Decide whether it makes sense to pay discount points to lower your interest rate. Lenders can show you the difference in monthly payments.
  • Ask if you can wrap your closing costs into the loan or if the lender can offer you no cost refinancing at a slightly higher interest rate.

Even with poor credit, refinancing your mortgage is not out of reach. But you should start taking charge of your credit today to see benefits tomorrow.



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