With bad credit, you can't afford not to refinance a high interest mortgage. Working with the right lender, you can trim your loan costs and help your monthly budget. You even have the option to cash out part or all of your equity to pay off high interest credit card debt. Subprime lenders can help you secure financing and reestablish your credit.

Ways To Reduce Your Rates

Even with poor credit, you can lower rates on a future refi loan. Adjustable rate mortgages offer lower initial rates than fixed rate mortgages. Often for two to seven years, rates can be guaranteed. After that, rates are based on an index fund, so they may increase. But with most lenders you can either lock in rates earlier or refinance.

Some lenders will also further reduce your rates if you opt for automatic payment. Your monthly mortgage payment is deducted from your checking account, so you don't worry about getting a payment in the mail.

The surest way to find low rates is to compare loan quotes. Each lender will offer you a different loan package with varying rates and fees. Base your loan decision on who can offer you the best overall financing. If you plan to keep your loan for seven years or more, consider paying a point or more to reduce your rate even more.

Kinds Of Rates To Expect

The best credit scores, 650 or higher, are eligible for market loan rates. Every 50 point drop, on average, adds a point or two to that loan rate. Closing fees are comparable to a conventional rate mortgage. A bonus with subprime lending is that you don't have to pay for private mortgage insurance.

Where To Find Subprime Lenders

Most financing companies now offer subprime financing to those with adverse credit. You can start your loan search with a mortgage broker. Simply mark that you have poor credit on your loan estimate form, and they will connect you to several competitive lenders.

Another option is to go directly to the lender sites. Either check their market rates on the homepage or request a quote. Make sure that you also note closing costs and fees. You don't want to get caught on early payment fees either.