How to Refinance With a Poor Credit Rating

A poor credit rating can be a hinderance when trying to borrow money. This is also true when you are trying to refinance a home loan. While you may end up with a higher interest rate than someone with a good credit rating, you can still refinance with a low credit rating. Regardless of your exact credit score or credit rating, you have some options when it comes to refinancing for a lower loan payment.

Instructions

1

Consult with a mortgage advisor to learn what your options for refinancing might be with your current credit rating. Typically you can find a mortgage advisor at your local bank.

2

Visit with a credit counseling service to see what it will take to raise your credit rating, even if it is just a little. Sometimes a small improvement can make it easier to refinance. You can find a credit counselor using the National Foundation for Credit Counseling website.

3

Apply at a local bank for an interest-only home loan if you want a lower payment and think that you will be able to raise your credit rating in the near future. With this type of loan, you typically make interest-only payments for five to seven years and then you work on paying off the principal. You can then refinance again, possibly at a better interest rate.

4

Refinance your home based on the current market value, which is called a traditional cash out refinance. This allows you to take out some or all of the equity that you have in the home.