With bad credit, you can't afford not to refinance a high
interest mortgage. Working with the right lender, you can trim
your loan costs and help your monthly budget. You even have the
option to cash out part or all of your equity to pay off high
interest credit card debt. Subprime lenders can help you secure
financing and reestablish your credit.
Ways To Reduce Your Rates
Even with poor credit, you can lower rates on a future refi
loan. Adjustable rate mortgages offer lower initial rates than
fixed rate mortgages. Often for two to seven years, rates can be
guaranteed. After that, rates are based on an index fund, so
they may increase. But with most lenders you can either lock in
rates earlier or refinance.
Some lenders will also further reduce your rates if you opt for
automatic payment. Your monthly mortgage payment is deducted
from your checking account, so you don't worry about getting a
payment in the mail.
The surest way to find low rates is to compare loan quotes. Each
lender will offer you a different loan package with varying
rates and fees. Base your loan decision on who can offer you the
best overall financing. If you plan to keep your loan for seven
years or more, consider paying a point or more to reduce your
rate even more.
Kinds Of Rates To Expect
The best credit scores, 650 or higher, are eligible for market
loan rates. Every 50 point drop, on average, adds a point or two
to that loan rate. Closing fees are comparable to a conventional
rate mortgage. A bonus with subprime lending is that you don't
have to pay for private mortgage insurance.
Where To Find Subprime Lenders
Most financing companies now offer subprime financing to those
with adverse credit. You can start your loan search with a
mortgage broker. Simply mark that you have poor credit on your
loan estimate form, and they will connect you to several
competitive lenders.
Another option is to go directly to the lender sites. Either
check their market rates on the homepage or request a quote.
Make sure that you also note closing costs and fees. You don't
want to get caught on early payment fees either.
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