Mortgage Refinancing: Save Money When Refinancing With Bad Credit

Mortgage refinancing with poor credit has become an easy task to complete; however, if you're not careful it's even easier to overpay for your new mortgage loan. Bad credit mortgage lenders are plentiful in today's market which is why proper comparison shopping is essential for homeowners with poor credit ratings. Here are several tips to help you find the best lender when mortgage refinancing with poor credit.

I. Bad Credit Mortgage Refinancing: Damage Control

The first thing you should do before you even think about a new mortgage is assess your credit. Credit records are maintained by three separate companies in the United States and you will undoubtedly have dozens of hands in your credit records throughout the course of a year. As a result, mistakes are common and your credit score suffers. Before you start shopping for a new mortgage request copies of your credit reports form each of the there credit agencies and carefully scrutinize them for errors. If you find mistakes in your credit files you will need to dispute the errors with each agency and the creditor responsible for placing it there. One the error is gone you will want to allow enough time for the correction to be reflected in your FICO score.

II. Bad Credit Mortgage Refinancing: Comparison Shop for the Best Loan

Depending on the severity of your credit problems you may have to seek mortgage refinancing from a type of specialty mortgage lender known as a "Sub-Prime" lender. Sub-Prime mortgage refinancing caters to homeowners that traditional mortgage lenders will not approve. You can expect to pay more because the lender is shouldering a greater risk when giving you a mortgage; however, if you do your homework and research lenders you can find interest rates comparable to what homeowners with good credit are paying. Enlisting the help of a Mortgage broker, provided you watch the broker like a hawk and do not pay retail markup, could help find you such a deal.

III. Bad Credit Mortgage Refinancing: Avoid Overpaying for the Loan

Before you start mortgage refinancing it is important to understand how the retail marketplace works. Mortgage companies and brokers are scoundrels, much like used car salesman, and receive the majority of their profit from overcharging you. Retail mortgage loans are commodity products just like cars. If you adopt a car buyer's mentality when refinancing your mortgage you will save yourself a lot of money. Retail mortgage companies and brokers represent wholesale mortgage lenders. When you qualify for a specific interest rate for your new mortgage, the wholesale sub-prime lender in this case, qualified you for a specific interest rate. Your mortgage company or broker marks up the interest rate to receive a commission from the wholesale lender. You are already paying that mortgage company or broker your origination fee, if you agree to pay retail markup you are in fact paying double for your mortgage.

You can learn more about bad credit mortgage refinancing while avoiding costly mistakes by registering for a free mortgage guidebook.

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Posted in: Credit,Money,Mortgage,Refinancing