Refinancing your second mortgage with bad credit is possible, but it is not an easy process. The process of refinancing is very similar to taking out the mortgage in the first place. It requires time and closing costs that may increase the cost of your mortgage versus drop it.
It is very important that you take the time to do the research on refinancing your second mortgage - Compare the rates and closing costs of several different lenders. Keep in mind that just because one lender is cheaper, it may not be the best deal. You may find that you are actually going to end up with an even higher interest rate, but with a lower monthly payment. This is possible because the life of the loan can be spread out over several more years than it was originally set-up for. Your bad credit will also affect whether or not you can even get a better interest rate then the one you already have.
Combining 1st and 2nd Mortgage - However, another option that you may wish to explore as well would be to combine your primary mortgage and your second mortgage into one. By refinancing both mortgages together you are making one payment versus two payments and you may be able to negotiate a lower interest rate with the lender. Before doing this you need to consider low long you are planning to live in your home, because it will be likely that if you were to sell your home you would not be able to sell it for enough to pay off both mortgages. As with all refinancing plans you need to consider the closing costs, interest rates, any points you may have to pay and if you are paying mortgage insurance. Mortgage insurance can cost you a lot of money and you will want to drop it if you can.
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Mortgage Lenders For People Who Have Credit Problems