Home Equity Loans Rate | Can You Refinance with Bad Credit?
Bad credit, including history of bankruptcy and foreclosure, shouldn’t keep you from the possibility of refinancing. But it can be both costly and risky. So be sure you do your due diligence before jumping in.
Refinancing can help solve some of your money problems. If you’ve accumulated equity in your home, refinancing can get you lower monthly payment, perhaps put some extra cash in your bank account and even raise money for your kid’s college education.
What’s equity? To put it simply, it’s the difference between what your home is worth and what you owe on it. And the more equity you have, the easier it will be to refinance and the more cash value you can get out of it. Looking at your equity this way makes your home your most valuable asset.
Even if you have poor credit, lenders are still willing to refinance. However, they’ll probably charge you a higher interest rate and maybe a couple of extra points or both to protect their investment. Depending upon your particular circumstances, it may still be worth it though. For example, if you can consolidate your unsecured credit card debt and still reduce your monthly payments, you could come out a winner – as long as you don’t start running up your credit card debt again.
Refinancing, however, is not for everybody. Make sure you don’t bite off more than you can chew. There are ruthless lenders who will ignore bad credit and offer you a deal anyway just to get their hands on your equity. It makes no difference to them if you pay back your mortgage. They actually would prefer that couldn’t handle the extra debt. They want you to default. That way they can foreclose, sell your home and take all the equity you have.
They have nothing to lose. But you could end up losing it all. So be absolutely clear what your terms and costs of refinancing are. Don’t be persuaded to refinance if your going to get yourself more in debt than you are now.