It seems like things couldn’t possibly get worse for many people today, with a record high number of foreclosures, high unemployment rates and other financial hardships related to the recession. Yet if you’re one of the millions who have managed to stay on your feet so far, now could be the ideal time to refinance your home – even if you have poor credit.
If one of your household earners recently became unemployed, your worried about your own job security, or you’re just having trouble coping with a higher cost of living and mounting debt, refinancing could help you avoid disaster. Even if you refinance with a bad credit home loan, it’s possible you could lower your monthly payments. This could provide you with the extra cash you need to make it through troubling financial times.
Homeowners who would like to be rid of the financial burden of multiple credit card payments may be able to refinance to consolidate debt. Although you are essentially borrowing again to pay off consumer debt by doing so, you’ll probably end up paying less interest on your debt with a bad credit home loan refinance than you would with credit card companies. You’ll also avoid aggravating and costly late fees and other possible extra charges associated with credit card debt.
Don’t make the mistake of thinking that due to a few late payments or credit blemishes, your credit is so poor you won’t qualify for a refinance that could ease your financial burden. A bad credit home loan may not lower the cost of your mortgage, but it could help ease a shaky financial situation you believe could worsen in the near future.
Borrowers with poor credit have different objectives than borrowers with good credit. A borrower with good credit and a stable situation usually wants to lock in a low rate and keep the loan for some time. But a bad credit mortgage doesn’t have the best rate, so you’re not going to want to be stuck with it forever.