Bad Credit Refinance 101: The Hows and The Whats

By:Nathan Dawson

If you are like every other home owner or general consumer out there, you need to pay for your expenses somehow. If you have bad credit, you might be limited in your options as to what you can do (or so you thinkkeep reading!). This can be especially annoying to homeowners who want to refinance their mortgages to take advantage of low interest rates but have had a few debt defaults in recent years. The story is always the same: you see these low 5% interest rates advertised on TV and you know that you deserve to refinance your home loan with this low interest rate. However, once you call, you find out that in fact you can refinance your mortgage, but it will cost you a lot more than you think. "What?" you think to yourself "Why does it cost more for me to refinance my mortgage than I thought it would?" The reason is simple: bad credit. Refinancing with bad credit can be difficult. You might have filed for bankruptcy or racked up a whole bunch of debt which you just couldn't pay off. Debt defaults take a long time to get off your credit report (if they ever come off!) and they can affect every lender to whom you owe money.

This is because these days, lenders are very clued in to borrowers credit scores and credit history. All your credit information is stored in a giant database somewhere and if your credit is bad for some reason, it's going to show up on a mortgage refinancing report. And banks probably don't mind seeing a few defaults and bad credit accounts here and there. More fees for them! Your bank might like to see one of their client's earmarked as 'bad credit'they can raise your interest rate and you can't do anything about it.

These days, having bad credit isn't necessarily as bad as it should be. This is because banks are business entities too. Banks borrow money just like people do. In times of relatively low interest rates, banks need to make money by originating loans. And, a lot of new 'subprime' lenders have opened up shop in recent years and are specifically in the business of lending to people with bad credit. They are looking to refinance bad credit accounts like yours and collect massive fees on the backend.

Many people with bad credit history look to take out loans from friends and family. While this may be a fairly good short term solution, it might not be the smartest of long term business moves. What you need to do is refinance your mortgage and lower your payment. The best thing you can do for yourself is to shop around. I'd be willing to bet that some banks will give you a better deal on a mortgage refinancing than you think they would. Find out who's got the best rate to get the best deal on your loan. This might take a little legwork, but it could pay off. Finding that right bank to give you the right deal on your refinancing will be worth the effort.

Mortgage can last a lifetime and that extra 1% can add up to literally thousands of dollars over the years. I have friends that are in their 70s and still paying off their home loans. It'll pay off in the long run to make sure you find the best deal possible. Don't let bad credit stop you from refinancing your home.

Digg del.icio.us Blink Stumble Spurl Reddit Netscape Furl

Article Source: http://www.articles2k.com

Find more great articles at a great online source for finance information.

Top Personal Finance Articles
1). Dealing with The Stress of Debt! By : Paul Duxbury As the New Year begins many people resolve to address the problems caused by their debts. This article provides some insights into dealing with the stress of debts.
2). Forecasting the Future Value of Your 401(k) By : Stephen L. Nelson, CPA If you’ve got Microsoft Excel (or just about any other popular spreadsheet program) running on your computer, you can use its FV function to forecast the future value of your 401(k) account. The FV function calculates the future value of an investment given its interest rate, the number of payments, the payment, the present value of the investment, and, optionally, the type-of-annuity switch.
3). What Makes a Credit Score Rise or Fall? By : Nathan Dawson OUR financial decisions can affect your credit score in surprising ways. Two credit-scoring simulators can help consumers understand the potential impact.
4). Handling Your Money Effectively By : Mary Williams There is inflation every year. You cannot stop an increasing in living expenses as prices of consumer goods increasing all the time. Saving money becomes an extremely difficult task to do. Here are some solutions for saving a little so that you can still meet your needs and still find ways to trim off a little for the future. 1. Budget – Get one and stick with it! And set aside at least a small portion for savings while you’re at it; savings for your future, your retirement, your education, your vacation, whatever.
5). An Overview Of The Direct Deposit System By : Bob Benson Direct deposit is an excellent feature offered by many banks all around your area. Banking is supposed to be convenient and easy, it has been made that much easier and more convenient with the offering of direct deposits. When thinking about direct deposit, consider many of the things that could apply to you. Have you found yourself hurrying off to.
6). Post-Christmas Financial Difficulties By : Mike Hanna If you’ve spent more than your budget can cope with, then maybe you’re thinking about credit to help you through January. Many people fear the long, broke month of January. After a lovely Christmas full of joyous smiles January can see a mood swing in the wrong direction. Many of us turn to credit cards to help get through this terrible month. But without knowledge of the financial industry a person without a great income can fall victim to the evil grip of unscrupulous credit companies.
7). Boost your savings By : Bob Benson It is general knowledge that residents of the United Kingdom are typically not savers. They tend to spend much more than they save; according to studies, saving money is not as popular as it once was. Saving is extremely important to the quality of life you expect to live in the future. Think about it, what would happen if your car suddenly quit working?.
8). How To Get Personal Loans For People With Bad Credit By : Susan Dean Personal loans for people with bad credit are available. There are a number of opportunities for those who are looking for money that do not have the highest scores out there.
9). If You Want To Make Money: Avoid Debt! By : Rene Graeber Everybody starting in life should avoid running into debt. There is scarcely anything that drags a person down like debt. It is a slavish position to get ill, yet we find many a young man, hardly out of his "teens," running in debt. He meets a chum and says, "Look at this: I have got trusted for a new suit of clothes." He seems to look upon the clothes as so much given to him; well, it frequently is so, but, if he succeeds in paying and then gets trusted again, he is adopting a habit which will keep him in poverty through life.
10). Refinance With Help From The FHA By : Lorna Mclaren Refinance, Home Loan - The FHA can help...

New Personal Finance Articles
1). How To Consolidate Your Debt If You Are A Homeowner With Bad Credit By : Craig Thornburrow Different debt consolidation methods you can use if you are a home owner with bad credit.
2). Bargain Buys for You in the Wholesale Market By : james lowe If you buy lots of goods you can save big money by learning how to use wholesale markets
3). Gold Coins - An Investment in Your Financial Liberty By : Ricardy Banks When you have a child, or even before you do, start collecting gold coins. When your child grows up, cash them in to send your high school graduate to the University of their choice.
4). Estate Planning: The Gift that Keeps on Giving By : Robert Valentine Gifting is one of the many estate planning tools available.
5). Living Debt-Free By : Debbie Dragon Do you dream of living without the burden of excessive debt hanging over your head? It’s possible, but not easy. Living debt free requires financial discipline, all the time. To become debt free and maintain a debt free life, try the following three steps: 1. Get rid of existing debt. This is obviously your first step to living a debt free lifestyle.
6). Accountant By : Jason Gluckman An accountant is a person who manages financial issues, including the preparation of financial plans and budgets, as well as the management of accounts and staff welfare. In most countries, officially licensed accountants are recognized by titles. In the UK, they are termed as “chartered accountants.” In the U.S., accountants are commonly known as “certified public accountants,” whereas in Canada, they are either known as “certified management accountants” or “certified general accountants.
7). Roth 401k – New Retirement Savings Plan. By : Simon Fox Brand new employer sponsored retirement plan is a hybrid of a traditional 401k and a Roth IRA. Income tax rates have been cut, the marriage penalty done away with, and the "death tax" is also on a path to no more. All of this is a result of the Bush administration's Economic Growth and Tax Relief Reconciliation Act which was passed by a Republican congress in 2001.
8). Budget Backyard Family Vacations By : Cheryl Johnson When travel and lodging are cost prohibitive, you can still have a vacation right at home. Yes, in your own backyard. Many of us live within reasonable distance to museums, campgrounds, historic sites, and beautiful state parks. You might be surprised at what you find in your own local area. Do some research in your area to find free or low cost activities and sites to visit.
9). The Cost Of Talking By : blueboy With so many companies offering “the lowest call rates, and the best service" who do you believe and are there any additional costs hidden in the small print? Do they all give per second billing by email, full cost analysis, discounted BT line rental and personal account managers? On mobiles do they offer free connection, and line rentals from £4? There has never been a better time to review the cost of your telephone charges and the service you are getting.
10). Asking for a lot of money By : James C. Samans Most people dream of making a lot of money. The question is, what does that mean? The truth is that money is highly subjective. Certainly, a billion dollars is a lot of money; there are only a handful of billionaires in the world. Is a million dollars a lot? In terms of total wealth, no; a significant minority of the population has a million dollars or more in total assets to leave to their heirs, largely due to the appreciation of real estate.