Refinancing When You Don't Have Much Money

Refinancing When You Don't Have Much Money

Over the past few years, Ahmad Sulaiman of Sulaiman Law and Associates has seen many homeowners jump at the chance to refinance their homes and lower their monthly payments without looking at the long-term repercussions. Here, he warns that you have to be leery of solutions to your financial problems that you think are too good to be true. Chances are you're probably right.

Your home is likely the most expensive purchase you'll ever make during your lifetime. Most individuals do not have extra cash on hand to pay for a home out of pocket. Thankfully, the mortgage industry is there to help potential homeowners afford the home of their dreams. Representing such a major life expenditure, most mortgages are paid off over a significant period of time – usually over a period of 30 years. Any reduction in the interest rate or length of the loan can therefore have a real impact on a homeowner's bottom line. That's why it's a good idea to keep an eye on mortgage interest rates and other terms, to determine when it makes good financial sense to refinance and cash in on potential savings.

The higher your home equity and the lower your outstanding balance, the higher loan amount you can borrow from a refinance home mortgage. As much as possible, lenders will try to limit the amount below the 80% range if you still have a sizable outstanding balance.

If however you are at risk of defaulting of your mortgage and would face the prospect of foreclosure, then you may want to subvert this rule and refinance to a mortgage with a longer period of time so that your monthly payments can be lower.

The current interest rate in Florida, for 30 years is 4.89%, for a 15 year it is 4.21%. These rates are fantastic when compared to some as high as 10% a few years ago. Being able to refinance one of the older loans at the new rate would equal a tremendous savings and allow the loan to be paid off much sooner.

Accessing online refinance bad credit mortgage lenders means that the homeowners will be able to compare between different refinance mortgage rates bad credit quotes and then come to a decision regarding which one is actually affordable and which is not. Refinance home mortgage bad credit loan will replace the original high interest loan with a new low interest mortgage loan that is within the budget of the homeowner and thus affordable. By opting for refinance home mortgage bad credit loan the homeowner is able to not only repay the home loan but also improve the credit score in the long run. An improvement in the credit score means that the homeowner will be able to get involved in future financial transactions without any tensions or worries.