Mortgage Refinance for Bad Credit Means Understanding Your Present Loan

In order to assess the true cost of a home mortgage refinance loan, start by  getting out the paperwork on your current mortgage. Here are some questions  that you should find answers to before starting a mortgage refinancing:

  

Does your loan have a prepayment penalty?

  

Some  loans charge a fee for paying off your loan early, either in the form of a flat  fee or as a percentage of the loan balance. The penalty is usually triggered  when you pay off your loan (by mortgage refinancing) in the first three to five  years. For example, if your mortgage balance was $220,000 and the lender  charged a 2 percent prepayment penalty ? you?d be hit with a $4,400 fee for  refinancing.

  

  

  

How much equity to do you has?

 

This is an important question if you are interested in getting a cash-out  refinance by trading in your current mortgage for a larger loan. In this  scenario, you?d be getting cash based on the equity you?ve built up in your  home. To find out exactly how much equity you have, use a home value tool like  Domania to estimate how much your home is worth. Then, subtract the balance of  your mortgage. (You?ll find your loan balance on your monthly statements.) Keep  in mind this is only an estimate ? the lender will most likely order an  appraisal to give you the true amount of your equity.

   

What is your interest  rate?

 

In order to figure out how much you could save by getting a home mortgage  refinance loan, or have bad credit and need one of the bad credit mortgage refinance loans you  need to know what interest rate your current mortgage is. This is essential for  mortgage refinance for bad credit. For instance, let?s say you got a mortgage  three years ago for $250,000 at 6.50 percent with a payment of $1,580. You want  to refinance your current mortgage ? $241,043 ? at an interest rate of 5.50  percent. Your new payment would be $1,369.

 

Once you?ve gathered the information on your current  mortgage, you can start to plan for your mortgage  refinance by calculating your new monthly payment and estimating  closing costs, including the pre-payment penalty if there is one.