Author Box
Articles Categories
All Categories
Articles Resources

Refinance the Mortgage You Got With Bad Credit: Why This Is a Good Idea

February 27, 2012 | Comments: 0 | Views: 119

Many people have jumped on the dip in home prices over the past few years, causing them to purchase homes. Since many lenders are offering home mortgage loans to those with bad credit, many people have taken loans with less favorable conditions in order to secure the benefits of home ownership. However, it is important for those buyers to remember that the bad credit score they had when they purchased their home will not always remain. Therefore, refinancing the home loan you originally took, and was generated based on your bad credit score, can greatly improve your financial life.

Changing Your Bad Credit

Many people have run into credit problems over the last few years, causing bad credit scores to stack up fast. Lenders have therefore changed the criteria that need to be met to buy a home. Borrowers with bad credit have been able to purchase homes as a means to increase their net worth and achieve the American Dream.

However, the circumstances of taking a home loan with bad credit often lead to unfavorable conditions for that loan. Namely, you will pay higher interest rates which leads to a larger monthly payment. Through the process of responsibly repaying your home loan, however, your credit score should improve, qualifying you for better loan terms.

Making the Decision to Refinance

The decision to refinance a home loan should be made based on the amount of money you currently spend on your home loan each month versus the amount of cash you have available to go towards that loan. Even a small change in interest rate can greatly affect the amount of your monthly bills, which is what makes refinancing such a great option. Consider this: a $150,000 home loan taken at 8% interest will require that you pay about $990 per month on your mortgage. However, that same loan taken at 6.5% interest will only be about $850 per month.

Clearly, there is an advantage to looking for a lower interest rate on your current home mortgage if you want to save money. So, if you know that your credit rating has improved since you first purchased your home, looking for a refinance loan could make a big difference in your quality of life.

Just Like Looking for Your First Loan

Many people who are interested in refinancing a mortgage that was taken with bad credit make the mistake of merely asking their current lender to help them out. While it is worth it to discuss refinance options with your current lender, remember that he is the one who stands to lose the most out of your refinance. Since interest rate is the profit a lender gets, lowering your rate means less profit to him. Therefore, your best bet is to find a competing lender to do your refinance. Since he is not currently making a profit from your mortgage, giving you a lower rate is in his best interest.

In many ways, looking to refinance your home mortgage is the same as when you were originally mortgage shopping. It is essential that you shop around and talk to several lenders. You may even want to talk to a mortgage broker about finding you a deal.

Hard Work Rewarded

When you had bad credit, there was a lot of work that you needed to do to pull yourself up back into the good graces of lenders. Once you have completed that work through responsible financial management, it is time to reap the rewards of that hard work. Choosing to refinance a mortgage you took with bad credit is one way to do that.

Mary Wise is a personal loan consultant who has been associated with Guaranteed Bad Credit Personal Loans and has more than thirty years of experience in finances. She has helped a lot of people to obtain Bad Credit Home Equity Loan, and many other products regardless of their credit situation. If you want to learn more about Personal Loans you can visit her at

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:

Fast Bad Credit Home Loan


Mortgage Refinance


Bad Credit Mortgage Refinance


Guaranteed Refinance Loan

The documents are inevitable to assess your age, income, employment and residence. For the loan to be petitioned from the bank, you need the right procedure of application.The documents are

By: Simon Liva l Real Estate > Buying l November 20, 2012 lViews: 257

The main reason why people tend to be apprehensive about moving homes is that it entails packing everything in the home, transporting it and then unpacking it in the new home. The entire process of

By: Ringo Star l Real Estate > Moving Relocating l October 27, 2012 lViews: 210

There are a number of benefits to owning a second home. Buying to let is a long term investment. The property will usually accumulate value over time and also can generate rent on a shorter term

By: Alan Trotter l Real Estate > Investing in Real Estate l October 19, 2012 lViews: 240

Building a home, especially your first one, can be an incredibly daunting task - there are a number of factors, including budget and planning, that must be taken into account before any sort of

By: John K. Taylor l Real Estate > Building a Home l July 10, 2012 lViews: 333

When you're ready to sell your house, the first thing you'll probably do is find a real estate agent to help you through the process. It can be so inviting to seek out the discount Realtors who offer

By: W Josh Anderson l Real Estate > Selling l July 10, 2012 lViews: 262

You see the signs everywhere, especially in a strong economy: For Sale By Owner. For some reason, many people believe they'll do a better job of selling their homes without the assistance of a real

By: W Josh Anderson l Real Estate > Selling l July 10, 2012 lViews: 240

This is the question many property owners might have when they are thinking about re-financing their house. The fact is that the answer for this question is a rather complicated one and the correct

By: Demetrius Weatherspoonl Real Estate > Mortgage Refinancel July 05, 2012 lViews: 177

Getting rejected for a mortgage loan is upsetting especially if you are borrowing it for something important like a home loan. Therefore, before applying for one, make sure that you are qualified for

By: Dawie Besterl Real Estate > Mortgage Refinancel July 05, 2012 lViews: 191

For years, underwater borrowers who remained current on their mortgages were forgotten and forsaken. At last, they have options. Here are the details.

By: Bill Irelandl Real Estate > Mortgage Refinancel July 05, 2012 lViews: 173

  Such is the strength of the Brazilian mortgage market at present; a number of the biggest banks in Brazil and across the globe are locked in intense competition in order to gain a bigger share of

By: Waseem Saddiquel Real Estate > Mortgage Refinancel July 03, 2012 lViews: 199

A mortgage originator (also known as "loan officer") is an employee of the mortgage lender responsible for processing mortgage transactions to lenders and borrowers. The originator is also

By: Dawie Besterl Real Estate > Mortgage Refinancel July 02, 2012 lViews: 176

Mortgage refinance loans with bad credit exist. However, before moving forward in your search, understand the options available and where you fit into the equation.

By: Donna N Hammondl Real Estate > Mortgage Refinancel July 02, 2012 lViews: 157

The fact that home loans for people with bad credit are available means that buying a new home is still possible for everyone. But there are conditions that must be considered before seeking one.

By: Mary Wisel Real Estate > Mortgage Refinancel June 29, 2012 lViews: 142

Approvals on payday loans with bad credit are amongst the most commonly secured loans on the market. In fact, they are much more simply approved that many expect and offer a genuine break to

By: Mary Wisel Finance > PayDay Loansl June 27, 2012 lViews: 185

Not everyone can qualify for no credit check military loans, but for those that do, approval can be virtually immediate. However, it is important to know there are factors to consider.

By: Mary Wisel Finance > VA Loansl June 21, 2012 lViews: 179

Approvals of mortgage loans for people with bad credit is more common than one might expect. But when the specifics are examined there is no great mystery why. Preparation is the key factor.

By: Mary Wisel Real Estate > Mortgage Refinancel June 10, 2012 lViews: 156

Getting money fast is hard when you have bad credit. That is why using a no credit check loan to meet those needs is really a good choice. This article will explain the details about no credit check

By: Mary Wisel Finance > Personal Loansl April 25, 2012 lViews: 178

Convincing lenders to approve a $25,000 unsecured loan is not a simple case of filling out the application form. But there are some steps to take that will improve the chances of success.

By: Mary Wisel Finance > Unsecured Loansl April 20, 2012 lViews: 175