Can You Refinance a Mortgage with Bad Credit?

If you need to consolidate debt or access some of the equity in your home, then refinancing your mortgage can be a good method of doing so as you can often lower the interest rates that you are paying. The problem however is that in order to get better interest rates, you usually need to have good credit.

That doesn’t mean however that if you have bad credit that you can’t refinance. You simply need to be a little more strategic in how you do so.

If you have bad credit and would like to refinance your mortgage, here are a few tips on how you can make that happen.

1.Talk to your mortgage broker.

While you may be able to access a dozen or so lenders on your own, your mortgage broker has access to hundreds of lenders – some of which will only work with brokers! In order to refinance with bad credit, it is important to shop around for the best deal and find a lender who is willing to look at the bigger picture and not just your credit score.

2.Talk to your current lender.

If you are making your regular payments on time and have been with your current lender for a while, they may be willing to overlook the fact that your credit is not stellar. An advantage of refinancing with your current lender is that you may be able to avoid paying some of the penalties that come with cancelling your mortgage early.

3.Work on improving your credit score.

If your credit score is the reason you are having difficulty getting your mortgage refinanced, then start demonstrating that you are taking steps to improve it. Start by calling Equifax and TransUnion and getting any errors on your credit report corrected. Then make sure you are making your debt payments each and every month. If lenders see that your credit score is on the way up, they may be more willing to give you a chance.

4.Get a co-signer

Finally, if you cannot get a refinance on your own, you may be able to get a co-signer. A co-signer is someone who has good credit that is willing to vouch for you. By co-signing, they are also agreeing to be responsible for the debt if you default so it is not a decision that they should make lightly.

If you have been considering refinancing but have not acted because you feel that bad credit will stop you, you can take comfort in knowing that refinancing a mortgage is possible even with poor credit.

To discuss your options, contact the team at Matrix Mortgage Global today.