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1. How to Refinance with Bad or Poor Credit
When you see that your credit score is dwindling and that you are far from the perfect payee, it is
natural to worry whether you can refinance in order to take advantage of the lower interest rates.
The reality is that this is perfectly possible. You just need to know how to refinance with bad
credit. This requires effort on your part, but you will appreciate the end results.
Check Where You Stand
The most important thing is to be fully aware of your current position for home refinance and of
the options which it gives you. You need to request your credit score and most recent credit
report. You should calculate what your debt-to-income ratio is at the moment. Find out how
much equity you have in your home to date.
Your next task is to do some market research to learn what interest rate you can expect given
your current financial standing. Keep in mind that lenders will take into account your debt-toincome ratio and the amount of equity that you have in your house to determine the interest. Once
you get an accurate estimate of what you can expect, you can actually decide whether the bad
credit home loans available will actually help you save money and get more affordable monthly
payments or not.
Make Improvements
Your best bet is to improve your current financial standing as much as possible. That way, you
may be able to qualify not only for loans for bad credit, but conventional ones which come with
lower interest. There are four major steps which you can take to get into a better position as a
borrower.
Pay all your monthly bills on time and try to use your credit cards as little as possible. You must
become a flawless payee. It makes sense to draft a budget and stick to it and to create a schedule
for bill payments with reminders. You should aim at using less than a third of the limit on all
your credit cards and make repayments on time so that interest is not charged on them.
Repay as much of your existing debt as possible. That way, you will improve your credit score
and your debt-to-income ratio at the same time. This will allow you to select not only from bad
credit mortgage lenders but from conventional ones as well. At the same time, you should stay
away from taking out new loans and getting new credit cards. This will ensure that your credit
score will go up and remain high.
Gain more equity in your home. By making larger mortgage payments, you will increase your
chances of securing more affordable refinance. Your debt-to-income ratio will be improved as
well.
Increase your income. This will also give you access to loans with bad credit which come with
lower interest rates and more flexible terms and conditions. It is true that it is difficult to raise
your income, but you can try things like doing work from home or getting a part-time job in
addition to your primary one. These are effective temporary solutions.

2. Compare Various Loan Options
The more loans you compare the higher your chances of getting the best deal are. The good news
is that you can select from a wide range of options.
The conventional loans and the loans for people with bad credit vary greatly from one another.
That is why you should get as many quotes as possible and compare them. You will have to do
calculations and analysis but your efforts will pay off.
An FHA loan may be the ideal refinance option for you. You can qualify with credit score of 580
or even lower. You can get it even with debt-to-income ratio higher than 50%. You can expect
the interest rate to be quite affordable as well. Just make sure that you take into account the
insurance payments which can push the cost of the loan considerably.
If you have trouble repaying your current mortgage, you should learn how to refinance with poor
credit via the government's Home Affordable Modification Program (HAMP). It allows you to
reduce your monthly mortgage payments to 31% of your income before taxes.
Can I get a mortgage with bad credit? Yes, you can. Even if you do not manage to make major
improvements to your current financial situation, you can still turn to lenders who specialize in
these types of home loans.