Refinancing Your Second Mortgage Or Home Equity Loan With Bad Credit

When you see that interest rates are dropping, you may find that by refinancing your home equity loan you will be able to save money. This is especially true if you don’t have the best credit and you are already paying a high interest rate. By refinancing your home equity loan, you may be able to drop that high interest rate, which means that your monthly payment should drop as well.

Closing Costs and Fees – Before you begin to refinance you will need to be aware that refinancing your home equity loan will require you to pay closing costs and other fees. This may affect your monthly payments so you need to compare how much you will be saving. You will also want to determine how long it will take you to breakeven. For example, if your refinancing costs you $2,000 and your payments are $100 lower each month then it will take you 20 months to break even after closing costs.

Can You Get Better Terms? – There are several reasons that you may want to refinance your loan if you have bad credit. Refinancing can allow you to lower your loan’s interest rate. You will also have the opportunity convert a portion of your loan into a fixed-rate installment loan or an adjustable rate loan. Shortening your loan term through refinancing will also allow you to build new equity more quickly. You are also able to avoid a balloon payment by refinancing your loan.

While you see that interest rates are dropping you will still want to be certain to shop around for the best rates on a refinance. You will also want to ensure that interest rates fall a point or more before you get your new interest rate locked in.

15 Mortgage Tips for People With Credit Problems – Look through our list of tips for people who are seeking a mortgage and have previous credit problems. You may find help for your current mortgage situation