Finance

In the past applicants with poor credit could not qualify for a first mortgage loan. Mortgage companies refused to consider approving a loan to anyone with a poor rating. Applicants who already owned a home could not qualify for a mortgage refinance loan. Recently, increasing competition in the market has led to more options for people with a poor credit history.

One smart move is to find and consult with a mortgage advisor who specializes in people with bad credit. There are fewer options available to people in this position, but an advisor with this specialty is often aware of possibilities you would never imagine.

Know what information the mortgage company will use to when coming to a decision. Take advantage of your right to obtain a free copy of your credit report annually and avoid companies that offer “free” subscriptions with their service programs. Compare your most recent credit report to past ones. This will allow you to know if your credit is improving, stabilizing or deteriorating.

Just because your credit rating is low does not take away the right to dispute information on your credit report that might not be accurate. Mistakes happen every day and by disputing those errors, your credit rating will often increase. Items on your credit report will no longer show up after a period about ten years (7 years in some countries). Bankruptcies will disappear over a similar time frame.

When speaking with a low credit mortgage advisor, you should be open and honest about your financial situation. Bad credit mortgage refinancing can be a tricky business. Your advisor will be able to help you effectively if they know exactly where you stand. You are at risk for losing the best possible mortgage refinance loan options and the advisor is there to help.

Talk to your mortgage advisor and discuss all of the options. If you don’t understand something, ask them to clarify. Bad credit mortgage refinancing can be very confusing and you should never act like you understand something if you don’t! You always have the right to not sign on the dotted line.

Your individual credit situation will of course dictate your options to a certain extent, but bad credit doesn’t mean you are without choices. Your interest rate is going to be higher than someone with good credit, but I’m sure you expected as much. Fixed rate mortgage refinancing loans will be harder to get, but with adjustable rate mortgages (also called ARM) and hybrids you will find an option that works in your situation.

Final word: Don’t do anything you aren’t comfortable with. Trust your instincts and always read the fine print. If you are still confused, ask a trusted friend or family member to have a look and offer their opinion. You don’t have to make the decision alone.