Bad credit can happen to anyone in any situation. If you fall behind on your credit card payments and start missing payments your credit will suffer. When it comes time to refinance your mortgage all of these late payments will have a negative impact on the mortgage you will qualify for. Here are tips to help you clean up your credit and qualify for a better mortgage.
The state of your credit will influence your reasons for refinancing. You may be refinancing your mortgage to lower your monthly payment. You can accomplish this by qualifying for a better interest rate or choosing a mortgage with a longer term length. Another reason for refinancing your mortgage is to improve your credit by consolidating debts. You can refinance your mortgage with cash back from your home’s equity to pay off your higher interest debt. Consolidating your bills will help you take control of your budget and catch up on your bills.
Before you refinance your mortgage for any reason you need to take stock of your credit and improve your credit score as much as possible. Your credit score is derived from your credit records. Credit records are maintained by three credit agencies; these records are often prone to errors. Request copies of your credit records from each of these three agencies and carefully scrutinize them for errors. If you find errors you will need to dispute the error prior to applying for a mortgage.
After you are certain your credit records are accurate, request your credit score. Your credit score is often referred to as a FICO score, named for the company that calculates it. Your credit score is determined by a number of factors in your credit records. These factors include your history of debt repayment and how much debt you have. You can improve your credit score by paying down the balances on your credit cards and ensuring all of your payments are made on time.
By: Louie Latour
Mortgage Refinancing: How to Refinance with Bad Credit
Refinance Your Mortgage at a Lower Interest Rate – Should I Refinance My Mortgage?
If you are looking to refinance your mortgage interest rate then now is probably a good time. The financial crisis has left many people struggling and defaulting on their loans, which have left banks more open to refinancing at a favorable rate to you if you have good credit. The question then becomes whether you should refinance or not.
While having a lower interest rate can save you money in the long run in the short term there will be closing costs that you must cover. The average closing costs on a $200,000 loan is $3,118. To this figure you will also have to factor in other costs such as fees, taxes, insurance, and association dues. So you’ll need to calculate the amount of money that you are saving and how long it will take to recoup these costs.
So for example if you are saving $100 in interest expenses it will take you 31 months before you begin saving money. In general refinancing to a lower interest rate only makes sense if you plan on being in your current house for another 4 years or more. If however you plan on moving and selling your home then you would be better off on keeping your current loan.
Another reason that you might be interested in refinancing is that you want to consolidate debt or extend your payment from 25 to 30 years, thus lowering your monthly mortgage costs. In these cases refinancing can make sense. You just need to weigh the over all costs and benefits.
One way to keep abreast of the current mortgage interest rates is through the BankRate.com and Mortgageloan.com websites. They keep track of current mortgage and housing trends and provide you with the latest news in their free newsletters.
Finally you will want to get a copy of your credit report before applying before trying to refinance your mortgage at a lower interest rate. You can do this at FreeCreditReport.com once a year.
By: Palmer Owyoung
Home Refinance: Why You Want to Refinance Your Mortgage
You may want to refinance your home for several reasons. The biggest reason that people refinance their homes is to save money.
If you qualify for a lower rate you could lock in that lower mortgage rate and stretch out the payments so that every month you are paying less to live in your home than before.
Once you decide to refinance your home, you will undoubtedly be confronted with a variety of choices as to what sort of new loan you can get.
One tactic people use is to shop the rate around to several banks to see what the best deal is for them. Refinancing your mortgage can certainly free up a lot of capital but you have to be careful. Some unscrupulous lenders may advertise a lower rate, but once you work out the math the lender may have added so many points and fees to your refinancing that you are actually paying more than some of the other advertised rates.
When you refinance your mortgage, you may be able to substantially reduce your monthly payments, especially when we are in a low interest rate environment like we are today. You may have bought your home in times of relatively high mortgage rates and therefore are locked into higher payments than you should be. These days, mortgage rates have been hovering around 6% and lower for a while. If you want to refinance your home and cut your monthly payment, now may be the best time to do it.
Mortgage rates rarely stay the same for long time periods.
Refinancing Your Home to Free Up Money for Other Purposes
Many people who are deeply in credit card debt or who have recently filed for bankruptcy may want to refinance their homes in order to free up some of their home equity and pay off their other debts. This can be a good strategy if the other debts are high interest rate debts. It’s not too hard to figure out that paying off debts that are charging you 20% per year with debt that is only costing you 6% a year might be a good deal.
People who refinance their homes often come out better than before, but as usual it pays to shop around. Find the best deal your can for your mortgage and your may be able to have a lot of spare money every month.
By: Richard Martin