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

Bad Credit Mortgage Refinancing – Refinance and Improve Credit

admin — Sun, 01 Nov 2009 06:16:47 +0000

Many homeowners have a goal of improving their credit. Despite efforts
to maintain a good credit rating, situations arise that can have a
damaging affect on our credit. A common problem involves acquiring too much
debt. In this case, some homeowners are unable to keep up with minimum
monthly payments. Skipping or submitting payments late will reduce your
overall credit rating. Fortunately, there are options for improving
credit.

Benefits of Refinancing a Mortgage with Bad Credit

Today, many homeowners take advantage of refinancing to help improve
their credit. Refinancing can serve a two-fold purpose. For starters,
applying for a new mortgage may help you obtain a lower interest rate or
convert your adjustable rate mortgage to a fixed rate. Additionally,
those who refinance have the option of borrowing some of their home’s
equity. This money is dispersed into a lump sum, and the amount wrapped
into the new mortgage

How Does a Refinancing Improve Credit?

Many factors contribute to bad credit. If you are unable to pay
creditors, have excessive debts, and several collection accounts, this will
reflect on your credit report.

When a potential lender reviews your loan or credit request, negative
credit report information may result in credit denial.

Because mortgages are collateral-based loans, it is easy to get
approved for a refinancing with bad credit. Furthermore, because of low
mortgage interest rates, it is possible to obtain an acceptable interest rate
with a bad credit refinancing. If you purchased your home before rates
began to fall, you may still obtain a lower refi rate.

To benefit from a refinancing, you must cash-out at closing. The money
can be used for a variety of purposes. Make necessary home
improvements, plan your retirement, or begin a college fund for your children.
However, if you are hoping to improve your credit, the money should be used
to payoff or reduce credit card balances.

Bad Credit Refinancing Lenders

If refinancing your mortgage with bad credit, select a bad credit
lender. These lenders are devoted to finding the perfect loan program for
you. For the lowest possible rates, consult several bad credit lenders.
Explain your situation and needs. Next, request quotes from these
lenders. Quotes will consist of interest rates, estimated monthly payments,
and fees due at closing. The final task involves picking a lender to
handle your refinancing.

By: Carrie Reeder

Bad credit refinancing » Refi

Should I Refinance My Mortgage Loan Now?

Bad Credit Mortgage Refinancing – Refinance and Improve Credit