Credit problems do not have to prevent you from refinancing your mortgage. In fact, refinancing can help you get a better handle on your debt, enabling you to improve your credit score. The important thing is to look at your total debt load and get the right type of funding for your credit situation.
Analyze Your Current Debt Load
Taking a look at your current debt load will help you determine what type of refinancing loan you need. If you are like the average American in 2004, the over $ 8,000 in high interest credit card debt is taking a toll on your budget. With average credit card rates at 18%, refinancing can cut those rates in half.
When refinancing debt, it's important that you take a look at interest costs. Any reduction in interest rates for credit card debt or other lines of credit saves you money. But with amortized loans, like mortgages, it can be more difficult to determine if a refi will save you money.
To make sure that you would save money by refinancing a mortgage, student loan, or personal loan, calculate the remaining interest payments on the loan. Then compare that to quoted loan costs to see your potential savings.
Get The Right Type Of Financing Package
With credit problems, you can not afford to get accustomed with a high fee, high interest loan. The number one thing that will protect you from loan scams is doing comparison shopping. Many legitimate subprime lenders will offer you rates just 2% to 6% above prime rates, depending on your credit score.
Refinancing your first mortgage with a cash out will help you qualify for the lowest rates. But if you choose to keep your first mortgage since it already has low rates, then a second mortgage is a good choice. Secure loans are always cheaper than unsecured. Of course, you also have the option of a personal loan if you do not have equity to draw from.
Take control of your credit problems today by refinance your debt for lower rates.