- 1). Inquire about a refinance with the company that holds your mortgage. If you have substandard credit, it is often easier to qualify with your existing lender, and you'll likely incur lower or no fees. If there are fees, try to pay them out-of-pocket instead of rolling them into your new mortgage.
- 2). Consider your local bank, where you are well-known customer. Good character goes a long way. Your lender also may be more lenient in granting you credit, especially since your refinance would be a fully collateralized loan. For added security, you might be required to have your mortgage payments automatically deducted from your checking account. Provide your bank with the requisite documentation, such as your deed and title policy, appraisal and survey, and tax and mortgage records.
- 3). Research Internet mortgage companies that offer refinances. Check their standing through the Better Business Bureau. Often, online mortgage companies are unethical lenders that offer risky mortgages at inflated interest rates with myriad hidden fees. These companies typically prey on those with substandard credit, but if you are desperate for a refinance, you'll probably qualify. If you decide on an Internet mortgage company, scrutinize the terms and compare them with your existing mortgage---it might not be worth the risk.
- 4). Find a co-signer, if you have poor credit. Ask someone who has sound employment and credit history and who wouldn't mind being fully liable for your debt if you default.
- 5). Consider waiting to refinance until you've saved a substantial amount of cash to lower your outstanding balance and loan-to-value ratio. Even if your credit is sketchy, a fully secured loan with plenty of equity is considered a quality risk for most lenders.
- 6). Inquire about stated-income or "low-doc" loans, if you have plenty of cash. These risky loans are made based on a combination of your stated income, equity position and credit score. The rates are almost always higher than conventional mortgage rates, and you should be prepared to have a loan-to-value ratio of about 50 percent.
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