Bad credit refinancing » Mortgage Payments

Should I Refinance My Mortgage Loan Now?

admin — Sun, 06 Jun 2010 05:24:10 +0000

You’ve probably heard a lot about mortgage refinancing on the news lately. In fact, if you’re a homeowner you’ve probably received a few offers in the mail from lenders as well.

The reason you hear so much about this topic lately has a lot to do with the mortgage / foreclosure crisis we are seeing right now. Many homeowners are in situations similar to those they have heard about on the news, having an adjustable rate mortgage set to adjust in the near future … and facing a possible spike in mortgage payments as a result. So, these homeowners naturally look into refinancing as a way to avoid such payment hikes.

The question is — when should you refinance your mortgage loan, and when should you avoid it? This question is high on the list of many homeowners, so I will do my best to shed some light on the subject.

When Refinancing Makes Sense

There are some general rules you can use to determine whether or not a refi makes sense for your situation. Bear in mind, however, that these are just general rules of thumb. So don’t make any financial decisions based on these “rules” alone. Do some further research into the subject and seek the advice of a financial professional.

With that being said, here’s a basic guide on when to refinance a home loan, from a financial standpoint:

Switching from an ARM to a fixed rate — This is a common reason why homeowners pursue a refi in the first place, especially with all the negative press the adjustable rate mortgage (ARM) loan has been getting lately. Eventually, an ARM will adjust to a higher interest rate that catches a lot of homeowners off guard. So many people use refinancing as a way to move to a more predictable fixed-rate mortgage. Capitalizing on Lower Interest Rates — This is another common reason why people refinance their home loans. When the rates are low, homeowners in certain situations can refi to a lower interest rate, and thus reduce their overall monthly mortgage payment.

The goal of both of these strategies is the same … to either (A) lower the interest rate on the loan, or (B) prevent the interest rate from rising through a mortgage adjustment. In both cases, the goal is to pay less money each month on the mortgage payment.

It’s Not Always a Good Idea

Now is a good time to point out that a mortgage refi is not always a good idea. And I can illustrate this through another rule of thumb: If the money you pay to refinance the loan (closing costs) exceeds the amount of money you save over the term of the new loan (lower interest rates), then it doesn’t make sense to pursue it. After all, nobody wants to pay more than they save in a financial transaction.

The key here is to do the proper research to find out what you would pay, as well as what you would save by refinancing. Once you’ve determined those numbers, you will have a much easier time deciding if a refi is right for you.

By: Brandon Cornett

Can I Refinance With Late Mortgage Payments

admin — Sat, 08 May 2010 11:22:07 +0000

Being late on the mortgage is something that many home owners never experience. But for those who have had past due payments they know how stressful it can make life. You have probably asked yourself, can i refinance with late payments? Well rest assured because the answer is yes! Read on to find out what programs will allow you to refinance when you have delinquent mortgage payments.

Late Mortgage Refinance Programs

How long ago your late payments occurred will dictate what programs you can use to refinance your home loan. If they were over twelve months ago you can use FHA programs to not only get a low rate but also a stable fixed rate mortgage as well. To qualify for this type of loan you will need to have debt to income ratios below 45% and your property taxes must be current.

Your other option would be a sub prime loan. Sub prime mortgages are available for borrowers that have late payments up to ninety days late and credit scores down to 500. The only drawback to these loans is they have high interest rates that often are over 10% and they also do not allow you to borrow much more then 80% of your homes value. Many sub prime loans are adjustable mortgages and if you cannot get your credit up to a higher level when the ARM begins to adjust you could be in for a major problems. While these loans have gotten alot of bad press lately they can help you get straightened out but only if used correctly. If you are taking out this type of loan make sure that you opt for the fixed rate option.

When you start to miss mortgage payments and realize you need some sort of help it can seem overwhelming. But take a deep breath and talk to a seasoned mortgage broker who can help get you into the right loan program to keep your home from foreclosure and your credit rating in tact.

By: Darin Sewell

Home Mortgage Refinance – Problems That Arise

admin — Tue, 04 May 2010 07:38:29 +0000

Planning to go for home mortgage refinance? Well, before you do so it is important to know some of the many problems associated with home mortgage refinance.

Common problems

There are the honest lenders and then there are the unscrupulous bad ones. While the prospect of owning your home may prompt you to make timely and accurate payments towards the home mortgage refinance payment, even the lender will try to keep your current mortgage strong enough. After all, he wouldn’t want to lose out on your money! Nothing in life is certain – employment conditions change, your place of stay may change unexpectedly and you may have the bad luck to be dealing with an unscrupulous lender out to get your hard earned money!

Insufficient funds

Many people face this problem especially when they are suddenly out of work or have been laid off. This can significantly impact the payment towards your home mortgage refinance and then it becomes very difficult to get out of this vicious cycle. One of the best things you can do in order to avoid this situation is to assess if you either have a secure job or whether you have set aside sufficient funds for crisis situations in future. Therefore it’s best to go for a home mortgage refinance only when you are absolutely sure that your job is secure enough to support you for a long time. After all mortgage payments are typically made over several years. Settle for a home mortgage refinance only when you’re sure of these conditions.

Change of place

There maybe times when you might have to move out of your existing home. It could be because of a transferable job, a bitter divorce or some other condition. Usually in the case of a situation like a divorce, once one partner has moved out, the other one is forced to pay all the bills. This can really eat into the income levels of that person. That means the home mortgage refinance payment too takes a beating. There might even be legal consequences of not being able to make payments on time and within the due date. There is certainly no guarantee on the strength of a relationship but when going for a home mortgage refinance it’s best to go for it only when the couple is committed to each other for long term.

Getting a raw deal

There maybe situations when you’re caught in a home mortgage refinance deal that’s actually costing you more, rather than helping you save! This could be due to scams and other such false promises on the part of lenders. In such situations it is in one’s best interest to get a home mortgage refinance from a bank with whom one has an account for several years. This is because over a period of time a relationship of trust is formed and hence the bank will be more willing to offer a better rate on the home mortgage refinance.

By: Alan Lim

Mortgage Refinancing: How to Avoid Mortgage Scams

admin — Mon, 03 May 2010 08:13:16 +0000

If you are in the process of refinancing your home mortgage you want the new loan to be the best mortgage possible. Many homeowners that take out bad mortgages don’t even know they are being taken advantage of. How do you protect yourself from advantageous, predatory mortgage lenders? Do your homework and research mortgage lenders before signing on the dotted line; here are tips to help you avoid being taken on your new mortgage.

The mortgage industry is a highly competitive business. To stay profitable some mortgage lenders resort to underhanded tactics that take advantage of homeowners, especially those with poor credit. Mortgage lender scams can cost you thousands of dollars; dirty lenders can even take your home. Here are examples of mortgage scams you need to avoid.

Beware Home Buyer and Mortgage Seminars

You see ads in the paper from time to time about home buyer seminars promising to secure mortgages for anyone, regardless of credit. If you’re thinking about going to one of these seminars make sure you read all of the fine print and find out what it is costing you. If you are required to pay a large up-front fee, chances are this is a scam. You may want to consult the Better Business Bureau before attending one of these home buyer seminars.

Paperwork Confusion

Some mortgage lenders try to confuse borrowers with their paperwork. This allows them to slip terms and fees into the contract that people would not agree to had they understood what was in the paperwork. Make sure your mortgage lender provides you with a legitimate Good Faith Estimate as required by law and you fully understand everything on this document and in your loan contract.

Beware Reconveyance Foreclosure Scams

Another common scam for homeowners that fall behind on their mortgage are the “avoid foreclosure” scams. A person or company purchases your home and agrees to sell it back to you when you can afford the mortgage payments. This is called Reconveyance, and there are organizations that do this as an honest service. Reconveyance scammers make it nearly impossible to buy back your home and can take your equity in the process.

Reverse Mortgages: Scams to Rip off Seniors

If you are senior considering a reverse mortgage to supplement your income you can protect yourself by using a HUD approved lender. Make sure you compare reverse mortgage offers from at least three different mortgage lenders and that you fully understand all of the terms in the loan contract. You can learn more ways to protect yourself by registering for a free mortgage guidebook: “Five Things You Need to Know About Your Mortgage.”

By: Louie Latour

Refinancing Your Home Even With Bad Credit

admin — Tue, 30 Mar 2010 13:07:44 +0000

If you have bad credit, attempting to refinance your mortgage loan can prove to be a frustrating, maddening and even a humiliating experience. You would love to take advantage of a refinance in order to lower your mortgage payments, but find it difficult because your credit score is just too low. It is tempting to give up, but it is not necessary, because there are ways to refinance your mortgage loan even with bad credit.

Before you begin your quest to obtain refinancing for your current loan with poor credit, consider two things. First, consider using a mortgage company that specializes in bad credit mortgage financing. Secondly, do whatever you can to clean up your credit report before you attempt to refinance your loan.

Because traditional lenders may shy away from refinancing individuals with poor credit scores, it might be a good idea to find a lender who specializes in bad credit refinancing. However, it would prove wise to try traditional lenders first, while avoiding lenders that you know very little about. Often times, traditional lenders have special programs for individuals with bad credit ratings. Lendingtree.com would be a good example of this, because they are a traditional lender with a special program for people rebuilding their credit. You can get a free quote with no obligations. Do note, however, that you will end up paying higher interest rates when you refinance no matter whom you choose to refinance your loan with, because of your low credit score.

Another important step in securing a bad credit refinance is to fix any and all credit problems that you can. This will increase the likelihood of you receiving better terms. Obtain a copy of your credit report from the “big three” credit bureaus. Scan it carefully and look for any mistakes. If you find any, notify your creditors or the bureaus immediately. Also, if possible, try to pay down any credit cards that are near their lending limits. This makes you look better to the mortgage lender. Remember, just do what you can and then carefully and methodically research possible mortgage refinancing companies.

Refinancing your mortgage loan with bad credit can be a frustrating experience. However, like with most things, a little patient, persistence and resourcefulness will bring you closer to finding refinancing terms that work well for you.

By: Anthony S.

Bad Credit Mortgage Refinance

admin — Sat, 20 Mar 2010 05:52:55 +0000

With todays aggressive mortgage lending market home owners with bad credit scores and late mortgage payments can still qualify for a bad credit mortgage refinance. Mortgage lenders who write these types of bad credit mortgage refinance loans are referred to as sub prime lenders and are mainly sold by mortgage brokers. Credit scores for sub prime mortgages are usually between 500 and 620.

Although borrowers with mid 500 credit scores and above should try and qualify for FHA financing before accepting a sub prime loan. There are drawbacks to a bad credit mortgage refinance, Sub prime mortgage loans carry with them a higher interest rate and many times a prepayment penalty. Although a small disadvantage to someone who needs the loan they should be taken into consideration.

Many bad credit mortgage refinances are originated in the form of a 2 year ARM. An ARM has an interest rate that will change in a certain period of time meaning higher payments. That time is 2 years for the 2 year ARM, Sub prime ARMS are available in 2,3 and 5 year periods. The ARM is not the only option for a bad credit refinance, you do have the option of going with a fixed rate mortgage but be ready for a interest rate that is .75% or more higher then the ARM rate. In general the sub prime mortgage loan is considered but many to be just a band aid type loan meant to carry you along until you can raise your credit score up enough to get a conforming loan. If you must take the ARM over the fixed mortgage do yourself a favor and take the 5 year ARM. It will give you much more time to straighten out your credit profile.

By: Darin Sewell

Bad Credit Remortgages – Refinancing to Reduce Monthly Outgoings

admin — Wed, 10 Mar 2010 05:43:17 +0000

Do you have problems with an Adverse Credit Rating? Are you a victim of the Credit Crunch? Do you need to consolidate debts to reduce your outgoings? If you find yourself in this position, then identifying companies which offer Bad Credit Remortgages could really help you get yourself back on your feet financially.

In these days of economic hardship, problems with Adverse Credit Ratings are becoming increasingly commonplace. The mortgage is usually the single biggest outgoing for those who own their own home, so anything which can cut down on that monthly bill is worth investigating further. However, a mortgage is also usually the cheapest type of loan anyone can have, so consolidating other high interest debts to your mortgage can also pay great dividends in reducing your total monthly outgoings.

Who Needs a Bad Credit Remortgage?

An Adverse Credit Rating is unfortunately a fact of life now for an increasing number of people. Often it is also due to circumstances completely outside of their control.

Some of the reasons that people end up with an Adverse Credit Rating are

Divorce Illness affecting their ability to work Redundancy

The above can lead to someone

Getting into arrears with their mortgage payments Becoming bankrupt Having their House repossessed Getting behind with Debit and Credit Card, Loan and Utility Bill payments Having County Court Judgements against them

Bad Credit Remortgages – How to Find Them

There is no need to despair! Although there will undoubtedly be fewer options open to you when you are looking for companies which offer Bad Credit Remortgages, in many cases you will still be able to find a mortgage company which will offer you an attractive Remortgage Deal.

It is important to appreciate that this is a specialist sector of the mortgage market, and you will be most successful in your search for the best Bad Credit Remortgages if you approach one of these companies.

A search on your favourite search engine will come up with many of these specialist companies, and it is worth checking also the ‘sponsored links’ for those offering remortgage deals specifically for those who are in this position.

By: Mark Salkeld

Bad Credit Mortgage Refinancing and Modification

admin — Wed, 24 Feb 2010 23:10:49 +0000

While getting approved for a mortgage refinancing or modification with bad credit may be hard, it is not impossible. These days there are plenty of mortgage lenders and banks who are happy to have you as a customer, but sometimes these come with a price. Homeowners with bad credit need to know what to do in order to ensure the best refinancing or home loan modification deal possible. Here are some things that can help you if your facing this situation:

- Homeowners with bad credit need to make sure that they compare different loan options, rates, terms, and conditions between different lenders and banks. Typically, you are going to pay a higher interest rate due to your bad credit, so saving as much as you can is a great way to maximize your benefits.

- Homeowners need to know what they want to get out of a refinancing or mortgage modification. Do you want lower payments? To shorten the length of the loan? Get cash back from the equity you have built up? Lock in a lower interest or fixed rate loan? All of these questions will effect the decisions and options you have.

- Homeowners who are unable to get approved through a traditional mortgage lender or bank may need to use the services of a sub prime mortgage lender. While the loans these lenders are able to provide are often at a higher interest rate, they are often times a homeowners only chance at getting approved for a bad credit mortgage refinancing.

Banks and mortgage lenders would rather help you than let you lose your home to foreclosure or mortgage default, especially in this economy. Homeowners who know they are going through hard times, or have already missed or been late on some mortgage payments, should take action now. Even with bad credit, it is entirely possible to get a beneficial home loan modification or refinancing, and change your financial out look for the positive.

By: Michael Petrone

An Introduction To Bad Credit Mortgage Refinancing

admin — Wed, 17 Feb 2010 15:05:23 +0000

Your home is probably your most important asset, and it is only right that you do everything you can to protect it. Keeping your home need not be a financially draining experience, though, if you are able to secure mortgage refinancing. By restructuring your mortgage loan into more manageable increments, you can slowly (but surely) own your home while rebuilding your financial position.

Just because mortgage refinancing is possible even after bad credit does not mean it is simple. You need to weigh in some important considerations before applying. Here are some questions to ask yourself:

Do I really need mortgage refinancing? Explore other ways to raise money and augment your monthly income – if you stay a few more hours at work to pay your overdue mortgage bills, or sell a few personal items that you don’t use anymore, you may not need refinancing at all. Keep in mind that there are also a lot of costs involved in mortgage refinancing, and that you may be better off sticking to the regular mortgage payments if you can still afford to.

Is mortgage refinancing my best alternative? Do your research and compare the rates of mortgage refinancing against other options like a debt consolidation loan. You should also consider peripheral costs, both money-wise and time-wise. Keep in mind that a cheaper option is not necessarily the best option – a certain lender may require only minimal processing fees, but take months to grant you the financing. In the end you may save more money by choosing a faster, though more costly, alternative.

There are a lot of free counseling services available to consumers with bad credit. Take advantage of these services and ask everything you want to know about mortgage refinance costs, such as interest rates and repayments. And don’t forget to be realistic – expect your bad credit mortgage refinance loan to be pegged at a higher interest rate than your existing mortgage.

By: Ken Marlborough

Bad Credit Mortgage Refinancing – Yes, You Can Do It

admin — Wed, 10 Feb 2010 23:07:47 +0000

These days it’s all too easy to have your credit slip down a few notches. If you are looking to refinance, that’s not where you want to be, but it’s not the end of the world either. Let your FICO score dip below 680 and you could be a candidate for bad credit mortgage refinancing. It depends on the individual lender. Let it get down around 650 or worse and you’ll be a bad credit refinance candidate for sure. With the recent shakeup in the sub-prime lending market, many lenders are being more selective about who they’ll extend refinance loans to. They’ll be looking seriously at your recent credit history. Several sub-prime lenders have ceased operations or declared bankruptcy, so there are fewer options available to borrowers in the sub-prime category.

Even so, you can still refinance, bad credit or not. There are options available to you, so you can take advantage of better interest rates. This can be especially important if you purchased your home using an adjustable rate mortgage, and the 3 or 5 year initial period is about to expire. When it does, your mortgage will adjust upward. This can cost you an extra $200 – $600 per month in higher mortgage payments. Many people don’t have the financial wherewithal to absorb such an increase in their mortgage payment. Even if you do, there’s little reason to do so when you can refinance and avoid the payment increase.

One of the first things you should do before you attempt to get your refinance underway is to order a copy of your credit report. You can do that for free once per year from any of the three major credit reporting bureaus. It’s really important that you do this because it will give you an opportunity to correct any mistakes contained in the report. A 2004 study indicated that about 25% of credit reports contained factual errors that reduced the borrower’s credit scores. Don’t let that happen to you, if pushes you into the sub-prime category, it can cost you thousands of dollars. In addition, you may find some accounts that are listed as outstanding but only because you owe a few dollars on them. Those are easily corrected so they’ll read “Paid In Full” on your credit report. That will go a long way towards raising your FICO score, and getting you a better interest rate on your refinance.

After you’ve done all your homework and corrected any inaccuracies on your credit report, you can begin the process of getting your refinance loan. Contact the different companies so your can do a thorough comparison. There is a large variation among different lenders. Get a written estimate of their rate and fee structure. You’ll notice some will quote mortgages with more fees, while others will have lower interest rates. Rarely will you find both. These companies have to pay for the money too, and it’s not free. Be
very careful when you scrutinize the different offers.

There are some things you need to look for. One of these is prepayment penalties. This a penalty the lender imposes if you pay the loan off early. They do this because they don’t get all the interest if you pay the loan off early. They were counting on a 15 or 30 year income stream from you in the form of interest. Typically it’s best not to get a mortgage with a prepayment penalty, even if it includes a lower interest rate, which they typically do. If the penalty is large, you’ll be severely hampered if you want to pay off the loan early, such as if you’d like to refinance again, or if you sell your home. Interest only mortgages are regularly sadled with this type of clause.

One of the things that is difficult about any refinance, but bad credit refinancing in particular, is comparing the offers. There are many business out there now that allow different lenders to compete for your refinance business. The great thing is, the lenders know their in a competitive bidding situation, so they go out of their way to give you the best refinance deal possible. Remember you do have options, no matter how bad your credit may be. Just do your homework first. The money you save on your refinancing will be your own.

By: Steve Faber