Regardless of your credit situation, it’s hard to ignore ads promising terrific low fixed rate refinances. The idea of saving thousands of dollars on your loan is tempting, and refinancing could be a smart financial move. But if you think your credit is bad, you might assume you’ll never qualify for the low rates you keep hearing about. In reality, it could be well worth looking into refinancing, even with a bad credit home loan.
To start with, have you verified your present credit score recently? If you initially took out a bad credit home loan, but since then your credit has improved, you could qualify for a new, lower rate that would save you a great deal on interest. It’s also possible you could clean up some items on your credit report relatively easily, and then apply for refinancing. Even if your credit still isn’t perfect, you could qualify for a bad credit home loan with a slightly better rate.
Another thing to consider is how much equity you have built up in your home over the years. Maybe your credit hasn’t improved substantially since you took out your bad credit home loan, but several years have passed and your home hasn’t dropped significantly in value. The equity you’ve built up could help you get approved for a better loan than the one you qualified for years ago.
Even with bad credit, home loan refinances are at least worth looking into, as the savings in interest over the life of your loan could be substantial. It’s also possible you could lower your monthly mortgage payments, providing you with extra cash to invest.