These days, just getting a home or auto loan is not the end of the credit journey. Most of us need to refinance our homes or cars at some point. What to do when you need to refinance but you have credit issues? This article will discuss the various things you need to keep in mind when shopping for a bad credit mortgage refinance loan or a bad credit car refinance.

Overview

A refinance loan is different than an origination loan in a couple of respects. First, there is already a loan in place which is generally a good thing. If you’ve made your payments on time, hopefully your credit has improved some since you first acquired the loan. Second, there may now be equity in the property to draw on when refinancing. With the housing market today however, not all home owners are finding that they have equity. There are a few programs that will loan more than 100% of a home’s value.

Get prepared, know the facts and then start shopping for the right bad credit home refinance armed with the right information that can save you thousands of dollars.

Credit Worthiness

Just like when you first purchased your home or your car, your credit score will be an important factor in the kinds of refinance options you have available. Know your score, know what blemishes are on your credit reports and if possible have a written statement explaining the reason for any late payments or other derogatory information. Depending on your credit score, you may not even need a bad credit mortgage refinance.

Equity

Before you start looking for a particular program, it’s a good idea to know how much your home or car is worth. For homes, get a ballpark appraisal from a local real estate agent. You want to know if your house is worth more or less than what you owe on it. Find your most recent mortgage statement – that will be needed to verify your balance.

For a car, check out values on Kelly Blue Book to see what the current value of your car is and compare it to your car loan statement.

A refinance with bad credit is much easier to accomplish if you have some equity built up.

Types of Bad Credit Refinance Loans

• Bad Credit Mortgage Refinance – There are many refinance programs available for homeowners just as there are many programs available for home origination loans. In a way, you are shopping for a new mortgage altogether when you refinance. Refer to our articles on bad credit mortgages to get a broad background on the types of mortgages available.
• Bad Credit Auto Refinance – Most people refinance their car loans in order to lower the monthly payment. When you do refinance, consider the amount of time you want to be repaying your loan. You can lower your payment by either reducing the interest rate or by lengthening the term of the loan. If you have improved your credit since you originally purchased the vehicle, you may be able to negotiate a lower interest rate but keep your initial term which means you won’t be extending the life of the loan. Generally speaking, refinancing an auto loan is fairly straightforward. If your current lender does not have any available programs, make sure you shop around.

Summary

Refinancing is a major undertaking, particularly for bad credit home loan refinance. It is just like shopping for a new mortgage. Refinancing your auto loan is a bit simpler. With either kind of refinance make sure you know your score, know what you can afford and take the time to comparison shop.

I hope you have enjoyed this series of articles on Bad Credit Loans. If you have I would love to hear from you.

The entire series of articles is listed below for reference.

Bad Credit Loans | Part One: Loans for People with Bad Credit
Bad Credit Loans | Part Two: Mortgage Loans for People with Bad Credit
Bad Credit Loans | Part Three: Car Loans for People with Bad Credit
Bad Credit Loans| Part Four: Personal Loans for People with Bad Credit
Bad Credit Loans| Part Five: Bad Credit Refinance

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