Like many people, the recession hit me pretty hard. Thanks to a job loss, I got behind on some of my credit cards. Even though I did mange to make the mortgage payment every month, my credit rating nose-dived. While things did get better, I still wondered if it would be possible to refinance my mortgage with bad credit. After talking with a few lenders, I found out that my situation was not unique. I also found lenders who were willing to work with me. I managed to get terms that will save me money over the life of that mortgage. If your credit has taken a beating, don't assume that refinancing is out of the question. I'll share how I researched options and found a lender who offered a good deal. You could find that refinancing your mortgage is within your reach.
If you own a home, you have probably received at least a few mailers offering you the opportunity to refinance. You may not have given it much thought before, but there are some instances when refinancing your mortgage loan is a very good idea.
Credit Health Improvement
If your credit health has taken a turn towards a brighter side since you initially secured your mortgage, refinancing is a great way to save. The total cost of your home, including both the purchase price and the interest you pay, is largely based on your interest rate, and interest rates are largely based on your credit score.
The lower the credit score, the higher the interest you pay, which in turn means, the higher your mortgage payment. If your credit score has increased, there is a good chance that the interest rate you receive during refinancing will be lower, which could mean a lower monthly payment and a lower total cost of your home.
Finalize Marital Changes
If you recently divorced your partner, refinancing is a great way to finalize these changes when it comes to homeownership. Depending on the terms of your divorce settlement, both you and your ex might be listed as legal owners of the property.
However, if you want to keep the home and your partner wants out, rather than sell the property, you could consider refinancing the mortgage in your name only. Since the refinancing is essentially a new mortgage, you could drop your ex altogether. There are legal requirements for this process, and one of them involves approval from your ex, so keep this factor in mind.
If you used an FHA or other government-backed loan, there is a chance that you put down less than the standard down payment, such as 2% or 5%. If you used these programs, while you were able to bring less money to the table, you are likely being charged an additional fee known as private mortgage insurance (PMI) as a result of the reduced payment.
It is important to remember, that PMI is generally only required for 30-year term loans. If you can refinance the loan to a 15- or 20-year model, you can eliminate the PMI payment and reduce your mortgage.
If you have considered the idea of refinancing your home, you can use this list to help you make your decision. However, to ensure you make the right choice for your needs in terms of mortgage refinancing, speak with a refinancing professional for further assistance.Share
22 October 2020