Having bad credit makes it difficult to do a lot of things but it’s not impossible to refinance your home loan. Many lenders specialize in just that. What makes a bad credit refinance loan different from a regular refinance loan? A bad credit refinance loan will usually have a higher interest rate than a loan for someone with fabulous credit. Usually 2-6% depending on the borrower’s credit rating. Keep in mind that lender fees for a bad credit refinance will be higher. However, if you make sure to always make your payments on time for at least two years for a bad credit refinance and take constant steps to improve your credit, you should be able to refinance into a much lower interest rate. A bad credit refinance loan is actually a wonderful way to improve your credit rating.
Bad credit refinance loans come in a variety of options and terms. Most often they are fixed rates in terms of 15 to 30 years and most lenders will cater them to your family’s individual financial situation.
Why should I refinance?
Refinancing to consolidate credit card debt is a great way to increase your credit score, and get out of debt. Those who have high balances on more than one high interest rate credit card, car loans or other forms of installment debt should refinance. The interest rate on a bad credit refinance loan will always be better than paying 21% on multiple credit cards. Most often loans for bad credit refinance is spread out over 30 years; the monthly payment for the loan would still be lower than the total of all of the individual monthly debt payments.
A bad credit refinance loan can also be used to get a lower mortgage rate. If you had decided a few years ago to get a mortgage after filing a bankruptcy the interest rate on that loan is more than likely to have been extremely high. It’s possible to make some improvements to your credit and try to get a new bad credit refinance in an effort to get a lower interest rate than is being paid on the current loan. For a loan paying 13% interest, a 10% interest rate would help lower the monthly payment and cut interest costs dramatically.
With the recent news reports showing changes in the marketplace it’s best to speak to a loan specialist to determine what loan is right for you..
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