Bad Credit - Mortgage Refinance Is Not Impossible

You may believe that if you have bad credit, mortgage refinance is something your mortgage company considers impossible. You may think this because you are embarrassed and feel guilty about getting into financial trouble. You may just be surprised though. Your mortgage company may very well be willing to help you out of your bad situation since interest rates have recently plummeted to an all time low.

All they want is their money and if they have to agree to take a little less in interest paid they are willing to do that. They do not want to have to start foreclosure proceedings because they will never get any thing close to what the house is worth if it goes to auction. If, for some reason, the house does not sell then they will have to sit on it and lose more money everyday.

So, take the time to ask if you would qualify for a bad credit mortgage refinance. You could end up saving hundreds of dollars off your current monthly mortgage payment because interest rates are a lot lower these days.

Although your lender will not make this decision lightly you can get them to refinance your mortgage even though it is risky for them. Your mortgage company is going to look at your current income level, your income to debt ratio, and your current credit score before they make their final decision.

The interest rate you end up paying may be lower than what you are paying now but not as low as someone with good credit would pay. This is understandable. The mortgage company will also want to make sure that they are protected and you will have to provide multiple papers to prove you can make even these smaller payments. You also may have to escrow your property taxes and home owner's insurance which could make your monthly payment even higher than it was to begin with.

You can rest assured though, to know that your property taxes and home owner's insurance is getting paid. If you have been paying your home owner's insurance all along and you can prove it, your mortgage company will adjust your monthly mortgage payment amount accordingly.

It is possible that after all is said and done, your mortgage company will decline your application for refinance. What do you do then? Well, be prepared for the impending foreclosure proceedings to begin. Foreclosure can take as long as up to a year to become final and you have to move out, so you do have some time to get things under control.

At this point you need to take a good look at your finances and your options and probably make some tough decisions. If it comes down to you having to give up the house because you can no longer make the payments, you need to gather up as much money as you can to find a rental. Your life will definitely change if your mortgage company declines you for a bad credit mortgage refinance.