by Christy Lyons
If you find that the interest rates have dropped since your first mortgage, you can refinance to your advantage. If you?ve got enough equity so the new mortgage is for less than 80% of your home?s value, you can stop paying Private Mortgage Insurance (PMI).
You can also have lower monthly payments with mortgage refinancing, but this would depend on how much cash was taken out at the time of refinancing, the point paid to lower the interest rate on the new mortgage, the duration of the new mortgage, and on the type of loan you get.
Even if you have bad credit and have to pay somewhat higher interest rates, mortgage refinancing will still cost less than other forms of borrowing because the loan is secured by your home. If you use the money wisely, then you will be able to raise your credit score with time. When this happens, you will be qualified for better rates.
Your FICO score is computed by the 3 major credit bureaus, which are Trans Union, Equifax, and Experian. There is an update quarterly, and your score can be affected negatively by late or missed payments, filing for bankruptcy, having more debt than income, credit card balances too close to the limit, and so on.
Fixing Bad Credit If you are a homeowner, mortgage refinancing can go a long way toward improving your financial situation. Here are a few other positive steps you can take to speed up the process.
Using credit cards with care. Try to have only 1 credit card in your wallet. Take it out only when necessary and pay it off each month.
A Credit Union Membership. You should join a credit union. They are a very good source of loans for purchases.
Automatic savings. Arrange for your bank to deposit a certain amount of money from your pay check into your savings account.
Avoid credit repair scams. There?s nothing a credit repair company can do that you can?t do yourself with a little research and effort.
There are probably a lot of homes around you that have been refinanced. Well then, time has come for your turn.
Source: http://phoenixlivingnews.com/whens-the-right-time-for-mortgage-refinancing/2012/02/
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