Welcome to Refinancing Guide
Bad Credit Home Loan Refinance Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Refinancing mortgage loans is becoming quite popular today with many homeowners. While years ago when you got a mortgage to buy a home, you usually paid on the same mortgage for years until it was paid off, a lot has changed since then. One reason why refinancing mortgage loans is so widely used is that there is a larger variety of types of mortgage loans available to home owners. Banks now offer refinancing mortgage loans, home equity loans, reverse mortgages and more. Debt consolidation is another reason many homeowners choose refinancing mortgage loans. Often they need additional cash for a vacation, wedding, medical bills or other personal expenses. Anytime you get a loan of a sizable amount, the bank requires the borrower to put up some collateral towards the loan. You're probably wondering where the extra collateral is coming from, since your home may be your only asset.
from:When a bank borrows money for the purchase of a home, for their own protection, they usually will only borrow up to 80% of the value of the home. They're not as concerned with the price of the home as they are the value of the home. In case of a foreclosure, it's the value of the home that will concern them. If you are buying a home that's valued at $100,000, they'll borrow up to $80,000 towards the purchase. As the years go by, the balance of the loan decreases while the value of your home increases. If you're considering refinancing your mortgage loan for extra cash, they'll do an appraisal on your home. If your home is now valued at $120,000, they'll borrow up to 80% of this amount, which is $96,000. If the balance of your mortgage is down to $70,000, you have $26,000 of extra equity on your home to borrow against or use as collateral. This is why many people choose refinancing mortgage loans as a way to pay off extra debts or get money for other expenses.
Refinancing mortgage loans is also used as a way to improve their credit scores and pay off other debts. By again using the equity in their home, they can redo their current mortgage and pay off debts at the same time, giving them less monthly payments. With less monthly payments, they are able to make the payments on time, thus improving their credit rating. Refinancing mortgage loans is used for debt consolidation more than any other reason.
When banks take applications for loans, they always run a credit report before giving the loan. The higher your credit score, the better interest rate you'll generally be offered from the bank. This is why it's important to make all your monthly payments on time. Some people that use refinancing mortgage loans as a means of getting out of debt find themselves paying a higher interest rate because their credit rating is worse when they originally took out their mortgage. Refinancing mortgage loans often gives couples a second chance to get ahead.
Bad Credit Home Loan Refinance News
Mortgage Q&A: Borrowers hit by mess others made
The very real credit crunch continues. The political pundits keep preaching the sermon of the common-sense lending that's needed to get credit flowing again in hopes of jump-starting the housing market and spurring refinancing. Programs have been introduced. The Home Affordable Refinance Program (HARP), initiated a couple of years ago, ...
Read more...Dispatch Investigation | Credit Scars: Mixed and marred
Judy Thomas crumpled in her seat as the banker behind the big wooden desk said she couldn’t refinance her home. The nurse from northern Ohio was rejected for the loan because, in the financial world, she was also Judith Kendall from Utah who had bad credit.
Read more...My refinance loan is a HELOC. Is that bad?
Dear Dr. Don, We recently refinanced our mortgage of $87,000 to get a lower monthly payment. We just found out the loan we have is not really a mortgage but a home equity line of credit. Are we at a disadvantage with this type of loan?
Read more...Amy Hoak's Home Economics: Mortgage borrowers face litany of questions
As a home buyer or refinancer, you’d expect to submit recent pay stubs and bank-account statements when applying for a mortgage loan. But a copy of your college transcripts? Or a decade-old divorce decree?
Read more...Should I refinance my home to pay down credit card debt?
It’s possible that a home equity loan might be a better option than a refinancing. Although all of the interest payments in such a refinancing should be tax deductible, the IRS distinguishes between different kinds of indebtedness.
Read more...