Bad credit refinancing » Saving Money

Refinance Your Mortgage at a Lower Interest Rate – Should I Refinance My Mortgage?

admin — Wed, 30 Jun 2010 00:05:49 +0000

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

Mortgage Refinance – Tips to Help You Cut Fees and Costs

admin — Thu, 03 Jun 2010 03:44:23 +0000

Saving money through a mortgage refi is more than just finding the lowest interest rates. You can further cut fees and costs through the structure of your loan, avoiding PMI, and buying lower interest rates.

Close Credit Card Accounts

Close inactive credit card accounts to improve your credit score, making you eligible for lower interest rate loans. You will need to notify the credit card companies in writing that you wish the accounts closed on your request.

Next, check your credit report after 30 days to be sure closed accounts include the comment “Closed at Customer’s Request.” You want future lenders to know it was your request and not bad credit that closed your accounts. Also, take the time to check for any mistakes in your credit report that could negatively impact your credit score.

Avoid The Hidden Cost Of PMI

When refinancing a mortgage, as many as 30% of homeowner’s cash out part or all of their home’s equity. By investing in home improvements or paying off credit cards, this can be a smart. But, if you are borrowing more than 80% of your home’s value, you will be hit with private mortgage insurance, costing you hundreds a year.

Pay Points Now

If you are planning to stay in your home for several years, then you can save money by paying points for lower interest rates. You pay up front fees to ensure you have lower interest payments over the course of your loan. Remember, this only works if you keep your mortgage for several months.

Choose A Short-Term Loan

Short-term mortgages offer lower interest rates than long-term mortgages. You save money by the lower interest rates and shorter payment period. The trade off is a larger monthly payment, but this option can save you thousands.

Ask About Fees

Fees are a hidden cost of many mortgage loans. By law, lenders must disclose fees within three days of a loan application. Fees can go by many names like – document prep fees, courier fees, administrative fees, and more.

When comparing refi options for your mortgage, request a list of fees from several lenders. Add these fees with the interest of a loan. With these figures, you may be surprised that the cheapest loan didn’t have the lowest interest rate.

To view our recommended sources for refinance mortgage loans online, visit
this page: Recommended
Refi Mortgage Lenders Online.

By: Carrie Reeder

Three Rules of Thumb for Mortgage Refinancing

admin — Sat, 03 Apr 2010 05:47:51 +0000

You might think that deciding to refinance a mortgage requires only a quick comparison of loan interest rates. Unfortunately, that’s not really true. Refinancing is trickier than that! Fortunately, three useful rules of thumb can often help you make sense of refinancing opportunities.

Rule 1: Don’t Ignore Total Interest Costs

You really want to use refinancing as a way to reduce the total interest cost you pay. While that sounds simple in principle, it is sometimes difficult to do. The interest costs you pay are a function of the interest rate, the loan balance, and the loan term period.

When people refinance, they tend to focus solely on the loan interest rate. But they often don’t pay as much attention to the loan term or the loan balance.

When you use refinancing—even refinancing at a lower interest rate—to increase your borrowing or to extend the time over which you borrow, you often aren’t saving money.

Rule 2: Trade Expensive Money for Cheap Money

For refinancing to make economic sense, however, you do need to swap higher interest rate debt for lower interest rate debt. This calculation, however, is tricky. To make an apples-to-apples comparison, you must look at the annual percentage rate that will be charged on your new loan—this is the best measure of the new loan’s interest rate cost—and then compare this to the loan interest rate on your old loan.

You don’t want to compare interest rates on the two loans nor do you want to compare annual percentage rates on the two loans. Again, just to make this perfectly clear: You want to compare the loan interest rate on the old loan to the annual percentage rate on the new loan.

When the annual percentage rate on the new loan is lower than the loan interest rate on the old loan, then you are truly paying a lower interest rate.

Comparing annual percentage rates with loan interest rates seems confusing at first. But note that you would pay only interest on your old or current loan, so that’s all you need to look at in terms of its costs. With a new loan, however, you would pay both interest and any origination or closing cost fees. The annual percentage rate wraps the interest rate charges and setup charges, origination charges, and closing cost fees into one interest rate-like number.

Rule 3: Don’t Lengthen the Repayment Period

Be careful that you don’t extend the length of time you borrow by continually refinancing. For example, one common rule of thumb states that every time interest rates drop by two percentage points, you should refinance your mortgage. However, there have been times in recent history when following this rule would have had you refinancing your mortgage every few years. This could mean that you would never get your mortgage paid off. If you refinanced every few years, you would suddenly find yourself still 30 years away from having your mortgage paid.

By: Stephen Nelson

Can a Bad Credit Refinance Mortgage Loan Save Your Home?

admin — Sat, 30 Jan 2010 07:27:08 +0000

Refinancing Explained

When you refinance, you request a loan in order to pay off an outstanding loan. This makes sense if the new loan has better terms. The most important thing is that the resulting monthly installments should be lower than those of the previous loan. However, this reduction can be obtained in different ways.

A reduction on your monthly payments can be the result of a lower interest rate, lower administrative costs and insurance costs, longer repayment programs or a combination of all the above. The nature of this reduction is important since it will determine whether you will be saving money by refinancing or just lowering your monthly payments but by means of adding an extra amount to your debt.

In any case, if you are concerned about the possibility of loosing your home due to your inability to meet your monthly payments, the key is that you make sure that by refinancing your monthly payments will be reduced sufficiently so you can afford them without sacrifices.

The Bad Credit Issue

Even though refinance home loans are secured loans guaranteed by the same asset as the outstanding loan you are planning to pay off, your credit score and history will be important for the lender. If not as regards to loan approval or denial, at least, your credit will determine most of the loan terms, including loan amount, loan length and interest rate.

Since a bad credit score won’t let you get a lower interest rate (unless your outstanding home loan was requested in worst conditions), you will have to request a longer loan length in order to get lower monthly payments. Bear in mind though, that a longer loan length will also push your interest rate upwards.

Nevertheless, given your current situation, you can’t be conservative enough. Since you never know what unexpected situations may arise, ask for the longest loan length possible. You can always refinance your mortgage loan again in the future if things take a turn for the better.

Other things to do

Don’t relax once you’ve refinanced, there is a lot to do yet. You may have gone through a difficult situation but if you had been prepared you wouldn’t had to resort to refinancing. Learn how to make a budget and stick to it, cut all unnecessary expenses till your overall situation improves. Every extra cent you make, you need to destine it to repaying your debt. And as the situation gets better and your credit score improves, you should refinance your mortgage again on better terms.

Summing up, refinancing your home loan with bad credit might be the solution to your problems. You just need to make sure that by refinancing you’ll get lower monthly payments that will ease your financial situation enough. But refinancing is the first step; you should do whatever possible to improve your credit score and history in order to recover your ability to get finance with better rates and conditions.

By: Mary Wise

Bad Credit Rating Mortgage Home Refinancing is Possible!

admin — Fri, 15 Jan 2010 05:02:14 +0000

If you have a bad credit rating and are looking to refinance your home mortgage the refinancing process may not be as easy as it could be. However, these days there are a lot of mortgage lenders who cater to people with bad credit scores. That means that even with your bad credit you can still refinance into a better mortgage rate, or even perform a cash out refinance.

There are a lot of good dedicated lenders and banks who will do their best to help you refinance into a much better mortgage, regardless of your credit rating. Do not let bad credit prevent you from saving money through refinancing. Although it may cost a little more and require more patience and research it is definitely possible. You are not the only homeowner with bad credit who needs to refinance.

If you can refinance at just a 1% lower mortgage rate (hopefully more) you most likely can save money. This money can be used for anything you want but obviously should be used to better your financial future and credit rating. You can also use the equity you have built up in your home and do a cash out refinance. For example, if you owe $50,000 on your mortgage in 10 years and your home is worth $150,000 you can refinance into a mortgage that is worth $80,000 over 20 years and pocket the difference. This should only be done if it is properly researched and you take your financial future into serious consideration. Owning your home should always be the number one goal you have.

Most likely, your home mortgage is the most expensive payment you have. Refinancing it can be a huge money saving thing to do if you do it properly. However, if you refinance wrong you may lose thousands of dollars. Research potential bad credit mortgage lenders, and companies that specialize in bad credit mortgage refinancing. Once you get a mortgage quote you like shop it around to other potential mortgage lenders.

This increases your odds dramatically of that lender meeting or beating the quote you showed them. Especially when refinancing with bad credit be sure to take your time and be patient. It is very likely if you do research and make sure you comparison shop mortgage quotes you will save money every month on your mortgage.

By: Michael Petrone