Some people may try to avoid paying their mortgage loans as much as they can. But you know, it is a financial commitment you entered into and there's no escaping it. If you've put your signature on that loan and put your home as the guarantee for that loan, you either pay up or lose your home.
Losing your home over mortgage payment is hardly a good way to build a good credit. Sure, you may be responsible and nice. But you may have experienced some setbacks in your career and in your financial situation that you find it difficult to pay your debts. In a country where credit card and other debts are but normal, it is too easy for people to get bad credit. Having bad credit is really bad for your overall financial life.
Does this mean then that people with bad credit can no longer apply for refinance mortgage loans?
The good news (or maybe it's bad for some people) is that people with bad credit can still apply for refinance mortgage loans. But the catch is, they have to do a whole lot more homework and a whole lot of convincing before they could get one.
If you are a person with poor credit, you need to improve your credit score as much as possible, given your limited and difficult situation. Get a credit report from three reporting agencies. Look for inconsistencies, anomalies and mistakes. Set the record straight and make sure that you let them know.
You also need to accept that people with bad credit end up getting higher interest rates because the lenders and the banks are protecting their business and raising the cost for you. However, there are banks who can lower the interest rate for you as long as you demonstrate a willingness and a commitment to pay up.
Look for companies and lenders that work with people with bad credit. Such companies exist. But the thing is, there are no standard terms for borrowers in these companies. Do some surveying and ask around. The internet is full of forums and websites catering to financial situations of people such as you. If you get a 5.5% interest rate on a 30-year fixed mortgage, that is already a good indication. Look for some other options, compare and then decide on the best provider.
Bad credit happens to good people. Don't despair. There is still a way for you to take out a refinance mortgage loan if you knew where to look.