Bad Credit: Options for Refinancing a Mortgage

Like many people, the recession hit me pretty hard. Thanks to a job loss, I got behind on some of my credit cards. Even though I did mange to make the mortgage payment every month, my credit rating nose-dived. While things did get better, I still wondered if it would be possible to refinance my mortgage with bad credit. After talking with a few lenders, I found out that my situation was not unique. I also found lenders who were willing to work with me. I managed to get terms that will save me money over the life of that mortgage. If your credit has taken a beating, don't assume that refinancing is out of the question. I'll share how I researched options and found a lender who offered a good deal. You could find that refinancing your mortgage is within your reach.

Which High-Interest Loan Should You Pay Off First?


You got into a big financial mess a while back and borrowed money at high interest rates from several places. Fortunately, you're now digging yourself out of the hole and you're wondering which account to tackle paying off first. Of course, you'll still need to make your regular payments on everything, but it's a great idea to also start whittling away at the entire amount of one loan at a time. Then you can cross them off your budget one by one. 

Car Title Loans

If you borrowed money against your car title, you should probably pay this back first. Even if you have other accounts with higher interest rates, this is the one that puts you at risk of losing your vehicle. Approximately one in six people with title loans -- more than 16 percent -- eventually lose the vehicle to repossession. Get your title free and clear again so you don't have that concern hanging over your head.

Pawn Loans

Losing items you've pawned probably isn't as big a hardship as losing your car would be. Nevertheless, you may have some jewelry in the shop that has sentimental value, or you may simply not want to lose your power tools, electronics or other items of value. Pay the pawn shop and get your possessions back after you no longer have a lien on your car title.

Payday Lending Products

Payday advances and longer-term installment products from payday lenders can be a big help in a time of crisis. However, many borrowers get caught in a cycle of paying off and immediately renewing the loan, or juggling more than one. Since this is an unsecured lending product, you don't have to worry about losing your vehicle or other belongings, although you're at risk of collection activity if you're late with the cash.

If you have a short-term advance from one or more of these companies, pay that back on the next due date and don't renew it. If you have a long-term installment arrangement from one of these lenders, pay that back after you've covered the other types of high-interest loans you've taken out. 

Credit Cards 

For various reasons, you may be tempted to address your credit cards before tackling the other accounts. This is generally not the best strategy, even if:

  • the company has raised your interest rates because you've been late on payments
  • your card is at risk of being canceled
  • your account is at risk of going to a collection agency
  • all the circumstances with your credit cards are ruining your credit score

Once you finish with your other loans, you'll have more money every month to start chipping away at the credit card balances. In addition, you may be able to negotiate with these companies to return your interest rate to a reasonable amount.

Another possibility is working with the companies to create payment plans with monthly amounts that aren't problematic for you. This might require canceling the card, but since borrowing money has caused you substantial problems, canceling some credit cards may be the best thing at the moment.

The Road to Financial Freedom

Eventually you'll be back on track and will only have the standard payments most people must deal with, such as the rent or mortgage, utility bills and perhaps a car payment. If you ever get into a pickle again, react calmly rather than in haste so you don't wind up with so many loans.

A cash advance from a place like EZ Money can help if you might have your electricity shut off or are facing eviction, but you must be able to pay it back within the two weeks. Whether that means taking on extra work, selling some belongings or swallowing your pride and borrowing from family or friends, being disciplined will keep you on the road to financial freedom.


26 December 2014