Worried couple doing their accounts in the living roomRefinancing a mortgage or home loan can save you a lot of money over the entire life of that particular loan. Although refinancing a mortgage can be tough to accomplish, especially when you have a low credit rating, it is still possible to get it done. Below are some tips to enable you to refinance your mortgage even when you have bad credit.

Do Not Expect Very Low Interest Rates

Even though there are numerous mortgages advertisements in the media and online offering home owners extremely low interest rates, it is not easy to get home loans with such low rates. In any case, the interest rates have continued to rise with time and they are normally reserved for a few pristine borrowers. So if you have bad credit, you can still refinance a mortgage although not at the lowest interest rate in the market.

You Should Have Equity on That Property

In the current market, most lenders might refuse to refinance an existing home loan or mortgage particularly when the borrower owes more on that property than its worth, for instance if the home is under water. Even if the home is not submerged, some banks might not refinance the mortgage just on the basis of the owner having very little equity. This can be attributed to the fact that the new mortgage is made basing on the market value of the property at that particular time. The lesser the equity, the higher the risk.

Consider Loans Issued by the Government

Even if you do not have enough equity in your home, it is still possible to have the mortgage refinanced. It is only those lenders who do conventional mortgages that insist on a lot of equity. However, this is not necessarily the case for those banks that offer government-backed loans. Such loans are normally insured by agencies. To refinance your mortgage with such a loan, you will need a very little amount of equity. Another option would be to seek the FHA Streamline refinance which has lesser restrictions.

Make Your Application Attractive

Bad credit alone may not prevent you from refinancing the mortgage. However if the entire application is questionable then you should be concerned. Always make an effort to offset bad credit by making your application as clean as possible, particularly if you are in need of a conventional loan. Do the proper paperwork and document your income. Provide any required bank records as proof for your savings as this always makes the application attractive to the lender.

Following the above tips will enable you to refinance your mortgage even if you have credit issues!