Refinance Mortgage

With interest rates at an all-time low, many people are looking to refinance mortgage.

Some individuals are unable to pay their monthly bills; therefore, lower interest rates and lower monthly payments are very enticing.

Advantages of Refinancing

You might wonder if refinancing is a good option for you. There are several benefits of refinancing mortgage:

  • Lower interest rate: You need to look around and see what companies will offer you a lower rate. Experts say that if you can get a rate lower than 2 percent of what you are currently paying, you will save a considerable amount of money. When you pay a lower interest rate, your monthly payment will decrease; therefore, you will have some extra money each month.

  • Shorter time to pay of the mortgage: With lower interest rates, you can reduce the life of the loan, saving you a substantial amount of money.

  • Fixed interest rate: You can switch from an adjustable mortgage to a fixed mortgage; therefore, you will not have to worry about your interest rates increasing because of the market.

  • Consolidating your bills: If you have high credit card balances or other bills, you can use the equity in your home to consolidate your bills, so you will be making only one payment.

Refinancing Credit Card Debt

Disadvantages of Refinancing

Refinancing is not for everyone; therefore, you need to explore all options before you decide to refinance mortgage. Here are some disadvantages of refinancing your mortgage:
  • Costs: You might be expected to pay for an appraisal, closing fees, title insurance, credit reports and filing fees. The first few months of refinancing are mainly for the cost of refinancing, so if you are not planning on staying in the home for long, refinancing is not worth it because you could actually lose money in the process.

  • Judgments or Liens: In order to refinance your mortgage, you must pay any judgments or liens against your mortgage. This can decrease the equity in your home, making refinancing difficult.

  • Bad Credit: If you have delinquent bills or have made any late payments within the last year, you may not be approved for refinancing. If you have a low credit score, you might not be able to get lower interest rates.

Refinancing With Bad Credit

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Refinance with Poor Credit

Qualifications for Refinancing

When lenders consider you for refinancing, they will look at your credit score, income, assets, property value and the amount that you wish to borrow. You must fit a certain loan to value ratio in order to qualify for refinancing.

Getting Approved for Refinancing

After you have submitted an application for refinancing, you just need to wait. Refinancing is not a quick process, as all of the paperwork takes time. However, if refinancing will save you money, it is worth the wait.

How to Refinance your Mortgage

When refinancing mortgage, your lender will want to see your most recent copy of your mortgage statement. They will also need copies of your homeowner's insurance policy, proof of income and your latest W-2 forms. You need to contact a lender, and they will order your credit report and an appraisal of your home. After you fill out the paperwork, you just wait to be approved. Make sure you discuss possible fees with your lender.

Refinancing your mortgage has the potential to save you thousands of dollars. Therefore, you need to weigh your options to see if refinancing could be the right choice for your finances. Refinance mortgage could help you have some extra money to spend on other things, so you can be well on your way to a better financial future.

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