Financial Resource

Article by Brad Stridgeon

When getting a loan with bad credit, a borrower has to carefully deliberate before going through with it. The terms and conditions of most mortgages for bad credit are not the same as those of the usual loans. Refinancing home mortgage will lower interest rates and monthly payments. But that is going ahead too quickly. Bad credit will inevitably encounter obstacles in the attempt to refinance. Mortgage lenders normally heap high interest rates on borrowers with bad credit; which in effect negates refinance value. There are also devious lenders who will not think twice about scamming borrowers.

It is best to look around and check out several mortgage lenders before deciding to refinance one’s mortgage. You can visit lenders’ offices, call them on the phone, or visit their websites. There are sites that have comparison charts on lenders that you can use to come to a better decision.

If you decide to send an application online for a mortgage loan refinance, on your submission form choose a term with a fixed rate like 20 or 25 years. Also put in the current value of your home, your mortgage loan balance, the name of your lender, and the name of the bank which currently has both your saving and checking accounts.

Do not withhold any information regarding your credit history no matter how low your credit score is, the instances when your home was foreclosed, and if you had been bankrupt before put in the exact date you declared it. It is better that you do not choose the option that allows you to take a cash-out when refinancing the mortgage loan on your home.

Lenders naturally have different offers on mortgages for bad credit, do some research and compare, looking for the best rates and terms. Go for the loans with fixed rates with interest rates smaller than what your loan currently has. ARMs or adustable rate mortgages have cheap introductory rates but these will increase soon. Find out if a penalty is required down the line to pay for your mortgage. See to it that the monthly payments plus interest, insurance fees and taxes are well within your ability to pay. If not, seek a mortgage that has a longer term.

Always check with the Better Business Bureau (BBB) the mortgage ratings offered by creditors you are not familiar with. Never accept offers by creditors not on the BBB list. You can call the BBB office for this or just go their official website. Lenders don’t have to be endorsed by the BBB, but they should have respectable ratings with complaints filed against them all resolved.

Be aware of your rights as a borrower according to the law. The Truth in Lending Act or TILA was made into law specifically for the purpose of protecting debtors who take up mortgage loans. Mortgage creditors should always make known vital information like their identity, the amount of money involved in financing, and the amount of monthly repayments. In refinancing mortgages, a borrower has up to three days to cancel a mortgage contract provided the TILA disclosure form was made available by the creditor. If not, a borrower has three years to withdraw from the deal.

Never be taken in by slick advertisements that intend to deceive borrowers, especially those offering incredibly cheap mortgage rates. There are creditors who offer particularly low rates on mortgages for bad credit that actually are merely introductory rates. These inexpensive payments could also turn out to be interest-only payments. Unscrupulous lenders also employ misleading terms to deceive you, making you believe a mortgage has a fixed rate when in truth it has an adjustable rate.

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