Refinancing a home loan with poor credit is just as easy as finding financing with good credit. With hundreds of lenders in the sub-prime financing market, you can find reasonable rates by comparing offers. Start by polishing up your credit report. Then find financing that best meets your financial goals.

Fix Credit Report Errors

Polishing up your credit report will make sure that you are not unduly penalized for creditor mistakes. By getting a free copy of your report, you can check for any errors. If there are mistakes, notify the reporting agency to fix them.

You can also submit a letter explaining extenuating circumstances for late payments or bankruptcies. Some creditors will offer lower rates if there was a job loss or illness. However, the information will have to be verified first, potentially delaying your application for a bit.

Research Home Loan Financing Offers

With poor credit, you can’t afford not to shop for financing. Many companies target people with bad credit. You can protect yourself from these unscrupulous offers by researching market rates.

Without hurting your credit report, you can request home loan quotes either through a lender or broker site. Within minutes, you can get information on rates, fees, and terms. While these terms are often negotiable, it will help you sort through mortgage loan possibilities.

Base Mortgage Loan Decision on Your Financial Goals

Before jumping into another loan, make sure the financing offers best meet your goals. For example, if you plan to stay in your home for several years, a higher rate fixed mortgage could save you more money in the long run; or you could find that with a move in a couple of years, an ARM gives you bigger savings.

You also have the option of cashing out part or all of your equity. With a sub-prime lender, you don’t have to worry about PMI premiums. However, your rates may be slightly higher.

While you are refinancing now, keep your option to refinancing in the future by negotiating elimination of any early payment fees. This can be especially helpful if your credit improves in a couple of years so you can qualify for conventional loan rates.

See my recommended Bad Credit Mortgage Refinance Lenders for the lowest rates online.

Carrie Reeder is the owner of ABC Loan Guide.

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