Qualifying for a mortgage or refinance with bad credit is more difficult that it used to be. The days of easy money are over. Considering the damage done to the credit industry by widespread defaults on subprime mortgages, many mortgage lenders are certain to provide loans to people with bad credit and little to no liquid assets.
After that, there are still some bad credit mortgage lenders helping people get their loans approved much faster than going the traditional channels of banks and credit unions. However, bad credit mortgages and refi's typically carry a higher interest rate and often have higher closing costs, so it's a good idea to shop around and compare rates.
Interest rates are currently quite low, so even a higher than average interest rate may still be better than what you're paying now. Just remember to take into account how long you will have to live in your home to make the cost of refinancing worth it. The average is around 4-6 years before you start seeing long-term financial benefit from a refi. Once that loan has "paid for itself" you can realize thousands of dollars in savings on interest with just a half percentage reduction in interest.
The terms of some bad credit mortgages and refi's include a pre-payment penalty. A pre-payment penalty is a huge sum of money you are charged if you pay off your loan before it matures. It generally represents at least a portion of the interest that would have been paid over the full life of the loan.
Another way to pay your mortgage off early is to make half payments twice a month instead of the full payment once a month. Interest on mortgages accrues daily, so look for a loan with terms that will enable you to pay your monthly payment in twice a month installments; in other words, half at the beginning of the month and half in the middle of the month. This can be a very effective way to reduce your long-term pay out, since you're cutting your interest accrued every two weeks.
If wading through the jungle of bad credit mortgages is too daunting, engage the assistance of company that specializes in brokering these types of loans. It will be well worth it in the end to find a refinance you can live with and that saves you money in the present and in the long haul.