Refinancing Your Home – For People With Bad Credit – How To Get A Low Rate & Better Terms

No matter what kind of credit problems you might have in your past, there are things you can do to get a lower rate and better terms on a refinance mortgage. Here are three ways to increase your chance of a lower rate.

1. Strengthen Your Employment Factor – Stay at your job. See if you can get an increase in salary. With past credit problems, lenders will be looking more closely at the time you have spent at your job and at your salary. They will calculate your debt to income ratio. With bad credit, your debt-to-income ratio will need to be well in the clear.

2. Apply With at Least 2-3 Different Companies – If you have any equity in your home at all, you have something to work with. Yet, mortgage brokers have a tendency to make subprime borrowers feel like they have very few options. Most lenders nowadays have programs for borrowers with all types of credit. Subprime mortgage loans should be only 1-2 points above prime interest rate, depending on the borrowers credit.

3. Refinancing From a Variable Rate or ARM to a Fixed Mortgage – A variable rate mortgage is sometimes good when you start out in a home, to take advantage of low rates, but once you find a period where interest rates might start climbing and your “rate lock” period is almost over, you might want to consider moving to a fixed rate mortgage loan for long term security.

4. Work on Increasing Your Credit Score – There are many things you can do to improve your credit score and every few points you increase your score will help you get a lower interest rate and better loan terms. Paying your bills on time and reducing the debt amount on your revolving credit accounts are two sure ways to improve your credit score. Search online for more ways to improve your FICO credit score.