Obtaining a mortgage if you have bad credit is more possible today than it has been in the past. Perhaps lenders have become more lenient out of compassion for consumers who have had problems in the past. Or quite possibly, they have realized that borrowers who are seeking financing with a less than perfect financial record are just as much a profitable market as customers with a more favorable status. In any case, the result is positive for those borrowers that need to refinance their current mortgage, but do not have good credit.
Before you attempt to get new financing, you should find out just how bad your situation really is. You may find out that it is not as bad as you first thought. However, if this is not the case, the best thing you can do is be prepared when you approach a lender about a mortgage to explain your situation and see if they will be able to help you. Obtaining a credit report will equip you with much needed knowledge about your situation.
Once you get your report, review it to make sure all the information contained in it is correct. If there is inaccurate information dispute it with the credit reporting agency to have it removed from your report. In the event that you have to dispute the information on your report, wait at least sixty days for the changes to reflect on your report and to actually change your credit score.
Now that you know where you stand after reviewing your report, you can begin shopping around. The best thing to do is go to several different lenders so you have different quotes that you can compare. If you have a score that is less than about 600, you should use a company that specializes in sub-prime lending. These companies are more experienced in this type of lending and typically have special programs for these types of loans.
This is where knowing your credit history comes into play. When shopping around, before anyone pulls your report and checks your score, ask for a mortgage quote based on the information you already know, this will help to keep your inquiries to a minimum. Also, by doing this, you can find out on a somewhat preliminary basis if you will be approved or not. If the lender says that, based on your current situation and your past history, you are not able to refinance, you can move on to the next lender without having wasted too much of your time or resources.
You should expect to pay higher costs for a mortgage if your score is low. This does not mean, however, that the lender has free range to charge you excessive amounts of fees. Ask each lender to detail the fees you are being charged for the loan. This includes the interest rate, points charged, as well as any closing costs and refinancing fees. Review these fees with scrutiny and try to negotiate with them as much as possible. Even though you do not have a lot of bargaining power, you still have some.
Depending on the severity of your situation, getting help should not be too difficult. Since there are many lenders that work with consumers with bad credit, it should be easy to shop around and find help for your situation.
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