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Interest Only Loan Refinance

June 7, 2019   Home Mortgage

Refinancing of interest only loans simply means swapping one loan for another. It is an effective way to decrease the debt on existing loans. This is especially beneficial if the current interest rates are lower than the interest rates you are presently paying on the loan. Refinancing would enable you to convert your high interest debt into a low interest debt, as the amount of monthly payment would decrease. The extra money saved can be reinvested in something more lucrative like real estate or shares, or to pay off high-interest debts like credit cards. Refinancing is also done for converting an adjustable rate mortgage into a fixed rate mortgage. Refinancing has become so common in recent years that almost three quarters of new mortgages were refinanced loans in 2003.

Refinancing of interest only loans is very attractive, especially when the time comes for the loan to get amortized. That means the loan will have to be repaid at the current interest rate, along with the principle. Most people seek to refinance their interest only loan in order to buy more time, i.e. to delay the repayment of the principle further. However, this may also increase the risk on the loan, since the interest rates may go up further, the price of the house may come down or the economy may slump in the future.

Refinancing of interest only loans is ideal for people who are expecting huge capital gains in the next few years or are planning to sell their house by the time the interest-only period is over. This is a good alternative as long as the economy is good, the interest rates are steady and the prices of houses are increasing. Interest only refinancing is recommended for people who have irregular incomes like commissions or bonuses or those who are expecting a hike in their income in the coming years. The savings accrued from refinancing can also be used for home improvement, which will increase the value of the home in the future.

A few questions to be considered while refinancing are: how long do you expect to stay in the house? How much equity do you have in the house? Will you have to pay points for getting a low rate from the refinance? What would be the closing costs? Will the lower payments from the refinance enable you to cover the closing costs, points (if any) and the fees reasonably?

There are several lenders who are offering refinance options for interest only loans. The Internet is a good source for getting information about these offers and also to find out more about interest only loan refinance.

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How Do I Get a Loan a With Bad Credit Score?

June 2, 2019   Loan Tips

How do I get a loan with a bad credit score? Carefully, is the short answer. The more you know the easier time you’ll have getting the best deal and avoiding future financial problems.

Most people who’ve been told their rating wasn’t good enough once or twice assume they have a terrible rating, so the first thing you really need to do is figure out what all those numbers mean, and decide where to go from there.

Some lenders with a lot of applications only take the best of the best, while others will still give good rates for average ratings. What your rating actually is and where you are applying matters.

Now that you’ve decided what your rating actually is, how do you get a loan with a bad credit score? Well, if your rating isn’t the best, but not too bad, I strongly suggest looking into using traditional lenders over ones meant for people with poor ratings.

Lenders that set out to take customers with poor ratings are basing their interest rates on the idea that all of their customers have terrible financial histories. This means that you are being offered an interest rate meant for someone with a worse application than yours, and you could find a better deal elsewhere.

I generally recommend finding five lenders online and comparing rates and terms. Do be sure to look over the terms because companies will sometimes make up for a low interest rate by hiding some fees in their terms because few people read them. Even if you decide to go with your local credit union (which are known for offering low rates) it’s good to comparison shop online to get an idea of what’s available to you.

However, if your rating falls below 500, I recommend finding any other way around borrowing money at all because the interest rates you will be offered will be so terrible. You’ll likely have to take a guaranteed deal, where they take any rating, and typically these rates are so high that people wind up in a cycle of debt. If you have another option, use it.

When you have a poor rating and are looking at how to get a loan with a bad credit score start by finding out what your actual situation is, and go from there.

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