Even Bad Credit Mortgage Refinancing Requires Shopping

Yes, the mortgage market has  tightened, but mortgage refinancing rates are still at historic lows and those  providing Home Mortgage Refinance loans are anxious to find qualified borrowers  and even provide bad credit mortgage refinance loans. Here are four  things you need to know if you want to refinance right now.

1.Know yourself. Gather for yourself  all the information that a lender will gather about you: your credit score and  credit report; your debt-to-income ratio (the percentage of your income you  spend on housing and loan/debt payments); and verification of your assets and  income.

   

2. Know your mortgage. If you are getting mortgage refinancing for your  adjustable-rate mortgage, know when your rate is scheduled to reset and how  much your payment will go up. If you are looking to take cash out, estimate how  much equity you have ? the difference between the market value of your home and  how much you currently owe. Find out if your current mortgage carries a fee for  paying off your loan early.

       

3. Know your options. Think carefully about what kind of home  mortgage refinance loans are the best fit for you: a traditional 30-year fixed-rate or something  like a hybrid ARM (an adjustable-rate mortgage with an initial fixed-rate  term)? Crunch the numbers. Shop around for the best rate and terms on your new  loan or your bad credit mortgage refinancing.

4. Know your limits. Financially  speaking, that is. Make all your payments ? not just your mortgage, but any  other loans, utilities and credit card bills ? on time, every time. Put off any  big purchases, like a car or major appliances, until after your new refinancing mortgage closes. Check, and  then re-check, the affordability of your new mortgage. If you are taking cash  out of the equity in your home, make sure you can afford a larger payment. If  you are refinancing into an adjustable-rate mortgage, make sure you have a plan  for how to manage a changing payment.