How to Refinance your Mortgage

If you were pressured into signing a mortgage contract with bad terms, you may want to consider refinancing your mortgage. Refinancing can get you into a new loan with lower interest rates and a lower monthly payment.

Many homeowners are paying as much as double the monthly mortgage payment for the same price home simply because they did not secure a good rate. Worse yet, some have begun to fall behind on these inflated payments when they could have afforded a lower payment that is available with a good credit rating.

By refinancing your mortgage, you may potentially tap into lower interest rates than were available when you first obtained your mortgage. Even if you have damaged credit, you still might be able to lower your monthly payments.

First, you should understand that mortgage brokers often did not provide you with the best financing terms available. Some lenders provide a kickback (yield spread premium) to mortgage brokers to thank them for steering you into a higher interest rate loan than what you actually qualified for. In short, they cheated to line their own pockets and you are having to pay tens of thousands of dollars in extra interest because of their actions.

While federal law now forbids the act of using kickbacks to steer buyers into higher priced loans, you may still be stuck with the same high payment. By refinancing your mortgage loan, you may be able to lower your interest rate.

You can also benefit by changing terms on your new loan. If you are comfortable with your payment or can pay more, then you may be able to pay your loan off much earlier without a big hike in your payment. The interest savings can allow for an earlier payoff.

If you need a lower payment, then there are two changes that can help you reduce your monthly payments. First, a lower interest rate will allow you to reduce your monthly payment. Second, you may be able to extend the term for more months, thereby lowering your monthly payment slightly.

If you are seriously delinquent and have very bad credit, then refinancing your mortgage may not be easy. Instead, you may have better options by getting help with your mortgage.