How To Refinance A Mortgage With Bad Credit
Learning how to refinance a mortgage with bad credit can help you improve your credit score. If you are behind on your mortgage payments, refinancing may prevent a foreclosure. You may be able to extend the term of your loan when you refinance a mortgage with bad credit, which will reduce the monthly payment. You can then use the money you save to help pay other creditors.
- Contact your mortgage lender and ask for a loan officer. Tell him you want to refinance a mortgage with bad credit, and find out what he needs to process the loan. Complete a credit application, and give the loan officer any required additional information, such as tax returns. Ask him how long the approval process takes, and make a note to contact him on that date if you have not received an answer.
- Once your mortgage with bad credit is approved, review the loan terms. Find out what the interest rate and closing costs are, and ask the loan officer if he can include the costs in the new loan. See if the loan officer will reduce your interest rate if you have the monthly payments automatically taken from your checking account. Set a time to close on the loan, and make sure all signers are able to go with you.
- Find out when the first payment is due at the loan closing. When you refinance a mortgage with bad credit, the first payment may be extended for up to 45 days. This will allow you to catch up on some other delinquent credit payments, which will help to improve your credit score.
- Adjust your monthly budget if the new payment date changes. For example, if you are accustomed to paying the mortgage payment on the 15th of the month, and the new payment is on the 1st, make sure you have the funds in your account. This way, if you are having the payments automatically taken out of your checking account, you will not overdraw the account.