For example, if you are currently a homeowner, the payments you make on your mortgage are in no way reflective of your current credit score. Rather, the payments you make and the interest you pay your mortgage lender each month reflect the credit score you had back when you took out your loan.
However, it's a different story if you were looking to refinance your mortgage today. In that case, your current credit score will of course play a big part in the kind of interest rate you can qualify for with your refinance.
If you are interested in refinancing bad credit home loans, this mortgage refinance 101 "mini-course" can help:
What is a Bad Credit Home Loan?
A bad credit home loan is a mortgage you take out with a lender who specializes in working with bad-credit individuals. While it is very likely you will get approved for your refinance, the more important question is: can you get approved at an interest rate that will result in your ability to make lower monthly payments than you are now?
The Benefits of Refinancing
The biggest benefit to refinancing your mortgage is of course the prospect of making those lower payments. This can be achieved in two ways. First, you may be able to qualify for a better interest rate than you had before. Second, if you extend the life of your loan out over more years, you stand to make lower payments after the refinance.
Refinancing Bad Credit Home Loans: Mortgage Refinance 101
Here are some key take-aways from your own Mortgage Refinance 101 course:
* Credit is king when looking for a low interest rate: as you already well know, your credit score is the biggest factor in determining your loan's interest rate.
* Your history and relationship with your current lender matters: another factor that will be taken into account by your existing lender (should you choose to use them again for your next mortgage) is the quality of your relationship with them. If you have been making on-time payments, for example, that will be a feather in your cap.
* Shopping around will almost always result in a lower rate: but, before you approach your existing lender about a refinance, be sure to locate at least three other lenders to get quotes from. More choices is always better.
* Be prepared to document your work history: sense as a bad-credit borrower your credit score will not be the only factor under review, be prepared to explain your employment history and any credit report glitches to your would-be lender.
* Do not accept the first offer from any lender: as you start applying to lenders, never accept the first offer any of them gives you. Remember, you can always flinch at an offer, go away, and then come back another day if you need to. Never underestimate the power of flinching in a negotiation!
Take these lessons from this refinancing bad credit home loans Mortgage Refinance 101 course as you set out to get yourself the best rate.
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Article Added on Saturday, December 24, 2011
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