The Possibility of Mortgage Refinance with Bad Credit

March 27, 2009 by  
Filed under Home Loan Refinance

Being part of the ordinary and regular bunch, there comes a time when a mortgage loan needs to be taken for some reason. Some people though can lose control of their finances which can lead to the neglect of some other expenses like paying off their mortgage. This can get out of hand and can spiral to cause more problems. A way to get out of a mortgage, or at least get out of the loan to a better one, is to refinance.

Refinancing mortgage is basically having someone pay off your loan and pay that someone instead. The way it is advantageous to the debtor is that this new lender may offer better conditions, like lower interest rate or favorable terms, which partially alleviates the burden of the mortgage. Of course it does not mean you’re out of the loan but simply that you’re on easier water.

Mortgage refinancing, however, is not for everyone. Oftentimes, people who realize they needed to refinance are already in too much debt that refinancing with their existing status can prove to be counterproductive. Series of credit card and loan non-payments can result to what is called bad credit. This can significantly lower one’s credit rating which subjects him to harsher interest rates. This could mean that compared to the original loan’s interest rate, refinancing will actually give you a higher interest rate.

However, it is important to note that bad credit does not mean the end of the world. Mortgage refinancing with bad credit is still possible. All you need is the tenacity to look for lenders that are willing and more importantly, can offer terms and conditions which you can abide to in order to better your credit rating. A good place to look for a lender to refinance your loan is your lender himself. Renegotiating the loan is a very practical way yet a lengthy and complicated one.
There is, however, another way that will still involve your original lender. Strange as it may sound, falling back on your payments can actually entice them to lend you further. While this may seem ironic and is some form of vicious cycle, it is actually just business. They just don’t want you to default.

One reason for this is that the value of the house on your mortgage is lower than your actual debt. This can be due to several economic and social factors that have occurred as you are paying off your mortgage loan. A company can’t simply accept this already devaluated property in lieu of a balance that still has a chance to be paid off. That chance can be provided by your original lender by refinancing your mortgage loan so that in this way, as time goes, they will eventually get their money’s worth. That’s if you’ll stick to paying it, which you should really do.

Another reason they don’t want you to default is because potential income is lost when you do. Lending company don’t lend for public service but to earn from doing it. Going default means that they can at best get their money back, but the potential income from interest is lost. Refinancing mortgage allows them to give you the finances to resuscitate your mortgage and financial stability, and get them their bottom line.

Home Loan Refinance Answers Your Mortgage Woes

March 25, 2009 by  
Filed under Home Loan Refinance

Home loan refinancing is whereby you pay off an original home loan mortgage by applying for a secured home loan against the very same asset. This is beneficial to you especially when your original home loan is tied to a fixed interest mortgage loan rate which is not favourable and you want to avail of a more favorable rate with a new refinanced home loan.

Mortgage payments are very likely to get the biggest cut in your already constricted monthly budget. This makes it impossible for you to have extra access to cash and at the same time have a lower mortgage loan payment per month. Home loan refinancing makes this happen. Like most people, your house is probably your largest asset ever.

Home loan refinancing has an added advantage of adjusting your mortgage and interest terms. For instance, a mortgage whose interest you are supposed to pay for 30 years can be shortened to a term of only 10-20 years. This means thousands of dollars in savings for you. What’s more, a lower home loan refinance interest rate means being able to accumulate equity in your home at a faster rate, because with lower interest payments, a greater portion of your payment will go back to the principal by maintaining the same monthly payment.

There are two types of mortgage rates, namely adjustable rate and fixed rate.

Adjustable refinance mortgage rates are very helpful in times when interest rates are at low levels. However, adjustable rates are not as helpful when these interest rates increase. Usually, adjustable rates are preferred by people whose financial standing is not secure or those who are uncertain on whether or not they will stay long in the very same home.

On the other hand, people who are more financially stable or are certain of staying in the same home for a couple of years find it beneficial to change a fluctuating adjustable rate to a fixed one. With this scheme, you’ll feel more secure with a steady monthly payment, regardless of what the market environment may be.

On the other hand, a fixed-rate refinancing home loan keeps your payments stable, gives you a chance to lower your high interest rate, allows you to take advantage of your home’s equity and consolidates your debt. However, the big challenge lies on knowing when the right time is to avail of a refinance home loan.

All you need to do is to compare your present loan to existing loan options with their corresponding interest rates and figure whether home loan refinancing is a wise move or not. Nowadays, lenders offer a wide array of home loans – you just have to decide what is the best option for you.

Home Loan Refinancing–Points to Consider Before Getting One

March 25, 2009 by  
Filed under Home Loan Refinance

Mortgage Rates Hit Record Lows!

Statistics shows that home refinancing in the United States has been increasing in recent years.

One of the reasons why home owners refinance their homes is to lower their interest rates on the mortgage. Some other reasons include cashing home equity, reducing monthly payments, building home equity much faster, etc. Whether or not to refinance mortgage loan is a big decision that families should discuss thoroughly. Here are some points to ponder on before making that crucial resolution.

Rising Interest Rates
Some home owners come to a realization that they need to switch to an interest loan that is more or less fixed when interest rates are likely to go up. In getting a fixed mortgage payment plan, you need not worry anymore about future increases in your mortgage payments.

Monthly Budget Strain
Refinancing home loan is one of the ways to decrease monthly payments. Despite having a fixed rate, people still want to refinance home loans so that they could extend the loan’s term, especially during the times they experience difficulties in making their monthly payments.

The Stress Caused
Most people are initially attracted to adjustable rate mortgages since they are usually lower than the fixed-rate loan. However, some people aren’t aware that adjustable-rate mortgages are adjusted every year. Thus, when interest rates rise, monthly payments correspondingly increase.

Improved Credit Rating
Upon applying for a mortgage, many people have very little credit history initially. In fact, some may even have had unpleasant borrowing records. Everything in your credit standing, good or bad, is taken into account by the lender in calculating your mortgage’s interest rate. Refinancing home loans help improve your credit score and likewise, help you qualify you for a better rate as well.

In considering whether refinancing home loans is right for you or not, one should consider many factors. Put simply, you need to calculate your every decision when it comes to refinancing.

Mortgage Refinancing-Tips on Consider Before Going for One

March 24, 2009 by  
Filed under Home Loan Refinance

Refinancing loans are a great way to minimize expenses by transferring to loans of better terms and conditions compared to current loans. A very common loan is a mortgage since a house can definitely be one’s best asset which can give access to bigger loans. Refinancing mortgage has also been a common practice since mortgages usually involve longer terms and stricter conditions than other types of loans.

Refinancing mortgage allows you to transfer the rights of a mortgage to a lender which offers fewer burdens when it comes to the financial side such as lower interest rates and/or favorable terms. The best way to consider mortgage refinancing is when interest rate drops from the time you first take out your loan and/or your credit rating improves. These situations can definitely guarantee you better loan conditions and lesser expenses when paying it off.

Refinancing mortgages, though, need to be thought through carefully. Basically, it’s still a loan. You still need to pay for it and thus makes a dent in your budget. Careful planning and thorough examination of options must be made to get the best deals and to avoid going for mortgage refinancing that will only burden you further which technically defeats the purpose. Here are some mortgage refinancing tips that will provide insight on how to best go about mortgage refinancing:

1. To get the lowest possible rates in mortgage refinancing, you can apply for pre-approval from different lenders. This can enable you to compare among the offers. Just be sure that you apply to lenders who don’t pull your credit history. With regards to pulling your credit history, most lenders and mortgage refinancing companies will actually tell you if they’re going to do this. Having your credit checked can lower your chances of getting the best rates, so be wary of this action.

2. Another good and probably a basic way to gain access to lower interest rate in mortgage refinancing is to have better credit rating. A simple way to boost credit rating is to close your unused or inactive credit card accounts. You have to send a request to the credit card company to close your account so that it will be explicitly documented that the account is requested to be closed by you. Otherwise, it could be assumed that it was closed due to bad credit.

3. Before deciding to go for mortgage refinancing, it is imperative to be aware if your present mortgage has a clause for a pre-payment penalty. This means that if you pay-off your mortgage within the specified time of the penalty, around six months to three years, you have to pay a certain amount which is usually about six months worth of installments as a penalty. If your term has already gone over that bracket for penalty, then well and good because mortgage refinancing will cause no additional payments. But if you’re still within the time frame stipulated, then you have to do some serious calculations whether refinancing will be feasible.

4. As much as possible, go for the shortest term you can afford. Although going for longer term refinancing is lighter on the pocket, in the long run it is more costly. Having the shortest term possible can still be made within budget because basically it is by your budget you came up with it. It also frees you up on your loan the soonest time possible. This does not only release you from the loan but also your credit rating can improve, giving you access to better loans if ever you need it.

These are some of the considerations you should make before getting your mortgage refinanced. Going for one is a decision you need to think about real hard because it is still your finances on the line here.

Should You Refinance Your Mortgage?

March 13, 2009 by  
Filed under Featured, Home Loan Refinance

Everyday, homeowners are bombarded with offers and advertisements to refinance their mortgage at a lower rate. There are times when home refinancing is a great idea, and others when it may not be.

Reasons to pursue a mortgage refinance would include a lower interest rate, which may lead to lower monthly payments and the total amount of interest paid. Perhaps your credit score has greatly improved since you took out your first mortgage, or interest rates are considerably lower. You may also be considering financing improvements to your home and taking additional equity out of your home to pay for it.

Refinancing your mortgage can require quite a bit of time and effort in research and actually providing needed documentation to your proposed lender. Paycheck stubs, taxes and personal financial records will be needed to complete the application process. There are also fees charged by the bank when issuing a new mortgage.

Often, homeowners consider refinancing or using their home equity to pay off current credit card and other debts.

Other than refinancing your entire mortgage, you might want to consider a home equity line of credit, or HELOC. Rates for this type of credit are slightly higher than first mortgages, but are still much less than those charged by credit card companies. In addition, lapses on second mortgages in the event of a hardship or lost job will most likely not cause you to lose your home altogether.

Another reason to consider a HELOC is that you only use what you need. You may have $25,000 in equity on your home, but only $10,000 in credit card debt. This means that you can avoid using available financing unless absolutely necessary. In addition, borrowing only part of what is available will lower your interest charges owed on the HELOC.

That being said, using the hard-earned equity in your home should only be used as a last resort to pay off credit card debt. Debt consolidation help is available from several licensed advisors and counselors in every city and town, and may provide a better option that will not require you to seek additional credit sources.

Consolidating debts may include negotiating with individual creditors for lower interest rates or payments, or even forgiving parts of the principal balance owed. This will save you time and money, as well as expensive charges to take out a new mortgage or refinancing.

If your credit and income are high enough, another option is to pursue a debt consolidation loan. This may be unsecured or secured with property other than your home such as a boat or vehicle that is already owned outright. This option can still save money on interest rates and charges, while preventing your home from being at risk should you ever fall on hard times.