Refinancing your home mortgage when you have bad credit isn’t the ideal situation but it may be doable. Your first stop should be at your current lender. If you’ve made your payments on time every month since you initially took the loan out, then your lender may consider you a good risk and give you better terms than your credit would typically allow. If they’re not interested then you can move on to another bank. Look for those lenders who specialize in helping people refinance with bad credit. You don’t want to waste your time applying with a lender who only accepts borrowers with perfect credit.

 

Next, you want to make sure that you review the offer very, very carefully. You probably realize that because you have bad credit you’re not going to be offered the ideal interest rate. However, that doesn’t mean you have to accept any offer that comes your way. Look for the GFE, which is the Good Faith Estimate, and which tells you exactly what the fees for refinancing will be. You may find it worth these fees, but it’s important that you know what they are before you agree to a loan. The more information you have the more informed your decision will be.

real_estate_conceptWhile homeowners have a lot of reasons to refinance, they also have concerns. One of the reasons they frequently site for not wanting to refinance is because they don’t want to take on the additional fees required to do so. While there certainly are typically fees involved, it’s also true that they may not be as much as you think they are. When you apply to refinance, you’ll get what’s known as a “Good Faith Estimate,” otherwise known as a GFE. It has the total closing costs listed at the bottom, which many people believe is the cost of refinancing.

 

However, this number can be misleading. When you get this number when you’re considering refinancing your home mortgage, keep in mind that included in the number is the partial month interest, homeowner’s insurance that goes to escrow, and property taxes that go to escrow. These are all fees that you pay every month – whether you refinance or not. The best way to see the real cost of refinancing is to subtract these amounts from the GFE. You can then take a look at the actual loan origination fees to decide if the cost of refinancing outweighs the benefits.

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Refinancing can seem like a great idea, and for many homeowners it is. However, there are also those who don’t benefit as much from it. What it really boils down to is how long you’ve owned your home and how much longer you have until your mortgage is paid off. If you will be paying the loan off in less than a few years then it will likely cost you more to refinance than you’ll save. Use an online calculator to find out where your breakeven point is, and then decide if it’s worth it. It may be 2 years or 3 years – it all depends on your current mortgage.

 

On the other hand, if you decide to refinance your loan then you could see thousands of dollars in savings. And of course it’s worth mentioning that saving in the long run is not the only benefit to refinancing. Many people also choose Houston refinance because they want to lengthen the term of their loan in order to lower their monthly rate. Or they simply want the lower monthly payment that comes with a lower interest rate. These people can certainly benefit from a refinance and typically find it well worth the cost and hassle.

There are many reasons that it may make sense for you to refinance. Of course the most popular reason people go through the process is to save money on their monthly mortgage payment. If you’re able to get a lower interest rate then you may end up saving a significant amount on each monthly payment and pay significantly less over the course of your loan. Another advantage is the possibility of rolling your second mortgage into your refinance, which leaves you with just one monthly payment instead of two. These are both strong reasons that make it worth your while if the situation is right.

 

Of course it’s not the right time for everyone to invest in a refinance home mortgage . If you’re close to paying your loan off, then the fees associated with a refinance may be more than you’ll end up saving. If you’ve had poor credit but are in the process of improving it, then you may find that you’ll get a better interest rate if you wait a few years. Those who own more on their homes than it’s worth, otherwise known as owning an upside down mortgage, will likely not find a lender willing to work with them.

Los Angeles refinanceThere are advantages to variable rate mortgages when interest rates are high, but when they’re at historic lows – like they are now – those benefits evaporate. That’s why it may be wise to switch to a fixed rate and lock in a low interest rate. The first thing to do is to find out if there is a convertible option on your variable. This is a window of time that allows you to lock in a rate. Keep in mind that you’ll likely have to pay some fees to get this switched over, but that’s true of any Los Angeles refinance.

 

If you contact your lender and discover that this isn’t a possibility, then your next move is to contact other lenders. Remember that you’ll need to do your due diligence and ensure you’re choosing a reputable lender. There are websites that give you info on various lenders, including their rankings and what products they offer. Request quotes from the lenders you’re interested in working with and wait to see what you’re offered. While there will be fees involved in refinancing, you could end up saving thousands of dollars in interest over the course of your loan. At a minimum, it’s worth looking into.