When you refinance it simply means taking out a new loan in order
to cover the cost of a previous loan. Hopefully you walk out with
some cash as well! Ideally, the refinanced loan should have a
lower interest rate and a lower monthly payment.If you have bad credit, refinancing at times is helpful.
Refinancing makes perfect sense when the first loan taken during
a period of high interest rates can be paid off and a new loan
with lower interest can reduce your monthly payout. Be aware
though, if the difference in interest rates isn’t significant,
you should avoid refinancing as some lenders require additional
charges up front.Since a period of time has passed since you took out your first
loan it does impact the new loan. You will need to compare
different lender’s offers before refinancing your home or car
with or without bad credit.A big advantage to refinancing your home or car is the money you
can save from the first loan payment schedule. It’s also possible
to change the amount of your monthly payments or even change
banks so that you can get a loan on more favorable terms.It’s vital you pay attention and refinance at the right time. Be
patient and do your homework. Take the time to research the
market thoroughly to find the best interest rate and terms on the
loans available for your credit rating. Your credit history will
play a key role in being able to refinance. You might want to
beef up your score before you go into a lender to make a deal.Obtaining a Bad Credit Home LoanIt’s a common misconception that those carrying a bad credit
rating can’t get a home loan. This isn’t true since getting a
loan for homes and many other needs are now more than ever
possible even for those with less than glowing credit scores.Having bad credit means usually means you’ll be required to put
down more at closing in the form of a larger down payment and
you’ll likely end up paying a higher interest rate as well.A typical down payment on a bad credit home mortgage ranges from
3% to 5%. If you find yourself unable to come up with the down
payment you might need to find other avenues for the money as at
short stop gap measure such as a short term personal loan. Then
once you’ve refinanced you can access your financial position.
Another alternative is to look for a down payment assistance
program.Improving your credit rating will give lenders more confidence in
giving you a home loan. Actively working on
consolidating debt to improve your credit score
consolidating debt to improve your credit score, paying all your bills on time and
getting a major credit card with all payments current will help
tremendously. Also, keep a close eye on your credit report for
inaccuracies and incorrect information.Lending companies look at several factors when deciding whether
or not to grant home loans to bad credit individuals.Typically the loan to value ratio, monthly income and debt to
income ratio are considered. However, keep in mind that you’re
free to negotiate with your lender. Oftentimes it’s possible to
get better terms for your bad credit loans simply by doing a
little “haggling” with your lender.