If you are a homeowner with poor credit and need to refinance your mortgage loan, there are many options available to you. In times past, bad credit was seen as a barrier to obtaining a mortgage and more recently having poor credit meant you would pay a lot more. In today’s mortgage marketplace you can find many just as many competitive loan offers as a homeowner with good credit if you do your homework. Here are several tips to help you refinance your mortgage with poor credit without overpaying.

Doing your homework and researching mortgage lenders will eliminate most of the frustration and costly mistakes homeowners with poor credit experience when refinancing their mortgage loans. Everyone wants a good deal when refinancing their mortgage; however, the overwhelming majority of homeowners overpay for their loans regardless of credit rating. People overpay for mortgage loans because lenders take advantage of their lack of knowledge regarding the retail mortgage marketplace. Mortgage loans are products just like toaster ovens; if you adopt a toaster oven shopping mindset when refinancing your mortgage, you will save yourself a lot of money.

What’s a homeowner with poor credit to do when refinancing their mortgage loan? The answer depends on the severity of your credit problems. If your credit can be salvaged by paying down the balances on your credit cards and making on time payments for at least six months, you could still qualify for refinancing with a traditional mortgage lender. If your credit problems are too severe or you do not have time to rebuild your credit prior to refinancing, finding a specialty “bad-credit” mortgage lender may be your only option.

Bad credit mortgage lenders are often called “sub-prime” mortgage lenders. These lenders cater to homeowners with credit challenges and many offer competitive interest rates. When applying for a mortgage from sub-prime lenders it is extremely important to carefully comparison shop to avoid overpaying. There are a handful of bad credit mortgage lenders that resort to predatory lending practices in order to boost their profits. Careful comparison shopping will help you avoid these predatory mortgage lenders.

You can learn more about improving your credit score and comparison shopping for the best mortgage when refinancing by registering for a free mortgage guidebook.