There are two huge drawbacks to bad credit home loan refinance; the money you will pay over the life of the loan and the types of loans available to you are a bit riskier.
With bad credit home refinance you are refinancing your home mortgage over the term of 10, 15, 30 or even 409 years. If you have been paying on your mortgage already for 10 or so years then you have already paid a huge chunk in interest on the house. Remember with amortized loans most of the interest is paid at the beginning of the loan. So, in essence you are starting these interest payments all over again.
The second drawback to bad credit home loan refinance is that the loan structures available to you are going to have a lot more risk associated with them. It is doubtful that more normal standard fixed rate mortgages will be available to you. Loans such as Adjustable rate mortgages (ARMs) Option Loans (where you choose how to pay) and other exotic mortgages all have their own inherent risks. You need to be very careful with more exotic loan structures. you need to make sure that you understand these types of loans. make sure you know what the bottom line worst case scenario interest rate will be
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