If interest rates have gone down by at least one percentage point since you got your first mortgage, you could save a lot of money by refinancing. And if you have enough equity that your new mortgage is for less than 80% of your home's value, you can stop paying Private Mortgage Insurance (PMI), which will save you even more money.
Mortgage refinancing could also lead to lower monthly payments, depending on things like whether "points" are paid to lower the interest rate on the new mortgage, how much cash is taken out at the time of refinancing, the length of the new mortgage, and whether the new mortgage is a fixed-rate, adjustable-rate, or variable-rate loan.
Bob Cannon of BancMortgage Financial Corp. says, "The vast majority of people close their loans, make their payments, and don't think about it again." "They don't take a look at refinancing when they should."
Even if you have bad credit and have to pay higher interest rates, mortgage refinancing will still cost less than other ways to borrow money because the loan is secured by your home. And if you use the money wisely, you can fix your credit and raise your FICO score. You'll be able to get better rates in the future because of this.
The three major credit bureaus, Trans Union, Equifax, and Experian, figure out and keep track of your FICO score. Your score is updated every three months, and things like being late or missing loan payments, filing for bankruptcy, having too much debt compared to your income, and having credit card balances close to their limits can all hurt your score.
How to Fix Bad Credit
If you own your own home, refinancing your mortgage can help you a lot with your finances. Here are a few more good things you can do to move the process along:
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Discipline with credit cards: Carry no more than one card in your wallet or purse. Only use it when you need to, and pay it back every month.
Membership in a credit union - Join a credit union if you aren't already a member. They are a good place to get a loan for a car or a house.
Automatic savings: Tell your bank to put a certain amount of your paycheck into your savings account or retirement plan every time you get paid.
Avoid credit repair scams - A credit repair company can't do anything for you that you can't do yourself with some research and work.
Many of the houses on your block have probably been refinanced in the last few years. It's your turn now. Visit www.badcreditmortgagerefinancingnow.com to learn more about mortgage refinancing for people with bad credit and to get a quote based on today's best rates.
