By Roy Thomsitt
It is a common financial scenario across households in the
Western world. Multiple debts have started to build up: a car
loan here, a department store loan there; a bank loan here and
several credit cards there. While all may have seemed
manageable on the optimistic day you took them out, or spent
them, suddenly you realise that you cannot keep up with the
monthly payments. You miss out on a payment or two, and
suddenly you have a bad credit record. A few more missed
payments and you start to feel the pressure, so start thinking
The silly thing is, in asset terms you are not poor. You have
home of your own; it is mortgaged, but you have plenty of
equity. Now wouldn't it be great if you could get a new loan
consolidate those monthly payments and get your finances back
order? Well, maybe, you think, but can you get bad credit
What To Consider Before Seeking Bad Credit Mortgage Refinance
Any mortgage refinance package is not something to be taken
lightly, nor without careful thought about the costs,
consequences, and whether or not it is really necessary. What,
then, do you need to consider before refinancing your debts
through unlocking the equity in your home?
1. First of all, you need to make sure it is really necessary.
You should take a long hard look at your outstanding debts.
List them out, total the amounts owed, total the monthly
payments, and total the amount in arrears. Your cheapest and
simplest way out will be to put your current financial house
order without resorting to new, and possibly expensive,
a. Look at some ways to clear those overdue amounts. By taking
a critical eye to your home budget, your expenditure, see if
there are any regular expenses that can be cut out or reduced.
If so, take the necessary action and make sure that money goes
towards reducing at least one of the outstanding debts where
some amount is overdue. If you have several overdue debt
repayments, and it will take a few months to clear the
outstanding amounts with your newly released funds, write to
the credit companies concerned and tell them what steps you
taking to pay off the over due amount. That may take the
pressure off you a bit while you get things in order again.
b. Seriously consider how you can make some extra money. Will
few weeks' overtime, if available, help you clear the over due
debts and allow you to get your finances in order again? Could
you use one of your skills to earn some extra money part time?
Remember, if you take no action at all, your financial
situation will deteriorate. If it is possible to take some
action that will eliminate your overdue debts without
to bad credit refinance, then the chances are it is worth
c. Have a look around the house. Do you have any things you do
not use, but are worth selling to clear some of those overdue
payments? Do you have some old shares that you could sell, or
an old savings account, with a healthy balance in, you've not
touched for years.
2. You need to consider the other alternatives to bad credit
mortgage refinance, especially a debt consolidation loan. Look
around and get a few quotes for consolidation loans, ready to
compare the results with a bad credit mortgage refinance
option. Remember to make a note of the costs of each of the
loan options, as this may affect your decision.
3. You have now looked at the possibilities of paying off your
debts without resorting to a new loan or refinancing. If that
came up blank, or insufficient, then now is the time to
consider mortgage refinancing. Again, you need to shop around
and get more than one quote. With a bad credit record, some
lenders may try to get more money out of you than than is
really justified. You have the right to get the best deal
possible. Look very closely at the charges of the lender and
broker, if there is one, and record them, ready to use them in
your calculations to decide what option to take.
4. The final stage is to make a comparison between using bad
credit mortgage refinance and using a debt consolidation loan.
Really, you need to do this over the full term of the
What you will actually be comparing is:
The mortgage refinance costs, interest rates and repayments
based on the the best quote you have had,
Your current mortgage plus the costs of the consolidation
This is important, as the bad credit mortgage refinance loan
be at a higher interest rate than your existing mortgage. If
are not good with figures (many people are not so don't feel
about it!), ask a friend who is to help you out, or if you can
get free counseling from someone who can help you make the
Once you write down all the figures, the choice will probably
be clear. Remember, however, that with the option of keeping
your existing mortgage and having a separate debt
loan, once that consolidation loan is at the end of it's term,
say 5 years, you will no longer have any repayments. That is
why it is important to look at the whole mortgage period to
make a comparison.
About The Author: This bad credit mortgage article was written
by Roy Thomsitt, owner author of the website