Yes, it seems that lenders are not as strict as before and maybe that is for the sake of increasing business. But I think it fired back at both ends on the borrower and the lender. Just take a look around your neighborhood or the town you live in for foreclosures.
Bad credit refinance is not easy to obtain but they are not impossible. The most challenging part about getting a refinance with bad credit is finding a lender that will understand your problem and be willing to help. And the reason I say it is not impossible is because if you think about it, even borrowers with bad credit can secure a refinanced loan with reasonable interest rates if they have collateral which is usually your house. That way the bank or other lender can secure their money in case things go wrong.
The conventional lenders will normally not lend you another loan if you have bad credit, so you have to go to lenders who are willing to do that. Those special lenders realize that there are more people than ever who have bad credit for reasons like,
- Paying high interest rate and can not sustain payments any longer
- People lose their jobs
- People become physically disabled and get paid less or lose their jobs
- Divorce in a family
And because these problems are becoming more common there will be lenders who are willing to let you remortgage with bad credit to clear up your financial difficulties; but there is a high price that comes with it. The issue here is that those willing lenders are likely to charge you a high interest rate and maybe some other penalty fees.
Credit Counseling for Refinance for people with bad credit
Recognizing your debt is one thing and trying to correct it yourself is another thing. For some individuals they can handle the managing tasks, but for many it is not only ?too many things to do? but they lack the skill of understanding financial issues as well. Ask yourself this question, do you have the skills and the stamina of negotiating with lenders? If not then here are few factors to consider for handling your debt management with a credit counseling service?
In many instances it is best to see a credit specialist(s) where they can give you practical advice on how to consolidate your debt(s) and possibly refinance so you can reduce the interest rate and the amount of monthly payment while you pay off your debt efficiently.
Credit counseling charges a fee for their service, however, you should ask for a free initial consultation to let them know about your finance situation and if it is workable.
Things you should expect from a good credit counseling service
* Discussing your present financial situation
* Giving you with a detailed review of your income, assets and expenses.
* Give you some personalized options based on your objectives and your financial capability; this is sometimes called the financial management plan. * Do they provide a service of negotiating on your behalf with lenders for remortgage with both a reasonable interest rate and monthly payments.
* If not, do they provide referrals (of lenders) where they can send you to these referrals?
You should feel comfortable and clear at the end of the counseling session by knowing what options are available to you and how to execute them.
What to expect from lenders
When you apply for bad credit remortgages and yes, lenders do have a special department or specialist who specializes in bad credit remortgage. Borrowers should realize the following:
Bad credit refinance is different from the traditional remortgage loan where you have a good credit standing.
A bad credit refinance will normally have a much higher interest rate than a loan for someone with a clean credit history.
Even though bad credit refinance has a higher interest rate, in many cases, it is worth applying for. This brings us to the next point?
When you are paying credit card debts that usually have a very high interest rate and are consolidating into one bill through a lower interest rate of bad credit remortgage, it is a still a good deal.
Example: if you are paying several high credit card balances with a 16% to 24% interest rate, then if you want to refinance even with bad credit that charges something around 14% it is still a good deal. And you only have to deal with ONE bill.
Another important point that we sometimes overlook has to do with how the interest rate is compounded. The mortgage rates are compounded semiannually, while credit card debts are commonly compounded monthly.
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