Many people want to look into a mortgage refinance but don’t know if it is for them. Some common factors to think about include current interest rates, how long you plan to continue living there, and the length of time it may take for you to recoup your closing costs.
Think carefully about why you want to refinance your mortgage as well. If you’re going to do it to consolidate your debt, it might not be the best idea, as it could take even longer to pay off the mortgage. You might be better off first consulting with a debt relief company and getting debt management assistance.
Suppose you have already owned the property for a long time and have built up a good amount of equity. In that case, refinancing will be a lot easier. Once again, though, please don’t do it to consolidate debt or tap into that equity, at least not until you work out a debt management plan with a financial advisor.
While having bad credit will likely limit your options, that doesn’t mean mortgage refinance is out of the question. You can always speak with licensed lending offers to discuss your situation and learn whether you would be a good candidate for a program, whether it be a traditional type of loan or a government program.
Mortgage Refinance Gives You Flexibility
Refinancing a mortgage involves taking out a new loan to replace the existing one. This can be a good idea for those who have more flexibility with their terms and can choose the loan and rate terms on the new mortgage. In addition, when done correctly, this strategy will allow you to accomplish some other financial goals.
While you’re still be making payments, those payments are new for the new loan instead of the original home loan. This payment shift does not mean that you are paying off the original mortgage; all of that is handled by the lender(s) on the back end.
There is no rule that you have to go through the mortgage refinance process with a new lender. You may very well be able to get a better deal, including better terms and a lower rate with your current lender. But, of course, the option is always there to try and shop around with other companies.
If you think you want to go with a new lender or learn more about mortgage refinance options, a site like LoanDepot will provide you with all of the information you need and a calculator to help determine how much you could save. Get multiple quotes from several lenders at once and compare all rates and terms.