It is feasible to go for a refinance when you have built up at least 10% equity in your home (For Fannie Mae owned mortgages, the value is 5%). It is also possible for you to choose the option if your equity is less than 5%, but you may have to pay a certain amount of cash in order to make up for the difference in equity.
Many people with poor credit history look to take out loans from friends and family. While this may be a fairly good short term solution, it might not be the smartest of long term business moves. What you need to do is refinance your mortgage and lower your payment. The best thing you can do for yourself is to shop around. I'd be willing to bet that some banks will give you a better deal on a mortgage refinancing than you think they would. Find out who's got the best rate to get the best deal on your loan. This might take a little legwork, but it could pay off. Finding that right bank to give you the right deal on your refinancing will be worth the effort.
Stick with a simple loan. It is easier to understand and less likely to get you into trouble. Adjustable-rate mortgages may seem like a way to get a bigger house now or to keep more money now, but when the rates adjust you can get into trouble. Avoid anything with a balloon payment. Just choose a simple 30-year mortgage you can easily afford.
Resist "no cost" refinancing. No cost doesn't mean free. On the contrary: The closing costs are usually bundled into the new mortgage, which means you pay interest on them. The fees associated with a 30-year mortgage could cost you more than double what they would have had you simply written a check for them at closing. Or, if the costs aren't bundled in, you'll be charged a slightly higher interest rate. Either way, the lender wins.
Don't fall for the 0% apr unless it fits in with your master plan. A lot of brokers will try to get you locked into a low interest rate that will balloon on you in a couple of years and leave you out on the street.
