Even with a low credit score, you can refinance your mortgage for a locked in low rate. Bad credit doesn't have to prevent you from saving money on your loan costs. The best way to find a cheap rate is to research loan offers online. But you can also improve your loan application with the following tips.

Shop Smarter For Lower Rates

Poor credit borrowers turn to sub-prime lenders for financing. With rates not based on market indexes, sub-prime financing companies have a wide range in available lending rates. That's why it's so important to shop mortgage companies before you sign a loan contract.

With online financing companies, you can collect loan quotes without further lowering your credit score with multiple credit inquiries. Without looking at your credit report, lenders can estimate your rates and fees.

To get numbers that you can rely on, you need to give the most accurate information. That means checking on your credit report before you apply. You also need to have the most up-to-date information on all your debts, assets, and income.

Better Rates With A Better Loan Application

To improve your rates for a fixed mortgage, consider rearranging your short term debt. Spreading your debt across multiple accounts is a good idea. So is paying off part or all of your credit card debt.

Lenders also like to see a sizeable amount in cash savings. The rule of thumb is to have two to four paychecks in the bank, but more is always better.

With fixed rate mortgages, you also have the option of buying down rates. In order for you to see a savings with this step, you have to keep your home loan for several years. You should also consider that when your credit score improves, you could refinance again for low conventional rates.

Keep Your Options Open

The ultimate goal of refinancing is to save you money. So keep your options open when you look at loan terms. You may just find that an adjustable rate mortgage saves you the most money, especially if you don't plan to keep your loan for very long.