bad credit mortgage

Tips for Refinancing a Mortgage with Bad Credit

Tips for Refinancing a Mortgage with Bad Credit 300 212 Guardian Financing

If you are thinking about refinancing a mortgage, yet you know your credit is in poor standing, you don’t need to keep resisting the idea just yet. It is possible to find bad credit mortgage lenders for a better rate on your mortgage, and to restructure your current payment plan to a more convenient one. Whether you have refinanced before, or you are a first time homeowner, here are vital tips to help you get the best mortgage refinance rates with poor credit:

Pay other loans to improve your credit score

It is recommended that you clear any outstanding loan before you start looking to refinance your mortgage. Paying your current loans in this manner will help improve your credit score, because it will lower your debt-to-income ratio, which will ultimately impact your credit utilization ratio.

Deal with any errors in your credit report

Sometimes your creditors may report wrong numbers or wrong accounts to credit bureaus, and this may make it difficult for you to get refinancing without ever knowing why. You should ensure that your credit report and score are accurate, so that lenders base their assessment of your credit, based on current, correct information, leading to higher chances of getting an improved score.

Don’t shop for rates for too long

Shopping for rates for an extended period of time may result into a lot of hits on your credit report, and this may be construed as a red flag by the lenders, ultimately hurting your score. The recommended shopping period should be between 30 and 45 days, and if you are lucky enough, to find a bad credit mortgage loan during this time, then your score won’t be affected too much compared to extending the period to up to 60 days.

Consider getting a co-signer

Submitting your refinance application with a co-signer, who has good credit, will increase your chances of getting good rates with a bad credit mortgage. The co-signer will help you get approved, and they should be persons who you trust, and who can trust you as well.