Interest Rates drop again!

Well it happened again and we jumped on board.  We just refinanced our home from a 30 year fixed at 4.875 down to a 15 year fixed rate of 3.3%.  This refinance will save us approximately $205,000 vs the 20 year mortgage.  Its amazing what the time value of money can do you for.  We are planning paying extra each month and being able to pay off our home in 12 years.  How amazing will that be?  Think of the cash we can then invest.  Anyway, we're glad to have this blog back up and running.  Expect some posts soon about the new bankruptcy law changes for 2012. 

No closing cost refinace loans

With the new government regulation of the lending industry, it has become more difficult to find lenders that will offer a no closing cost refinance loan.  Bank of America, formerly countrywide, still offers it depending on your credit score.  Typically a no closing cost loan costs more over the term of the loan.  The lender will build your closing costs into the loan.  so for example, if you need a loan of $200,000 and your taxes, fees, insurance, and other closing costs come to $6,500; then you will simply have a total loan for $206,500.  This allows you to take advantage of lower interest rates with little to no cash out of pocket.

So how will banks make money?  The banks will make more money by offering this loan, because they typically charge a slightly higher interest rate.  This means over a 30 year loan, they will make tens of thousands of dollars more.  This is not always the smartest long term strategy for a person looking to refinance; but if you're not going to be in your house for more than 5-9 years, and you stand to make money from selling your home, this may be very advantageous for you.

Interest Rates drop

The MYTH: I have bad credit so when I go to refinance my home, I'm going to get stuck with a bad interest rate.  Interest rates have dropped this week, currently they are at 5.05% and 4.49% for a 30 year mortgage and 15 year mortgage respectively.  Even with your poor credit, you're still going get a killer interest rate.  Now is a good time to at least go talk to a bank or bad credit lender. 

Low APR mortgage refinance lenders for people with bad credit

Lots of mortgage companies are hesitant to finance people with bad credit or only a little money as a downpayment. A "bad credit mortgage lender" helps people who have a low credit score, low income, or no money down.


A bad credit mortgage lender will help you get a loan approved faster than programs offered by credit unions or a traditional bank.  The downfall is that you may have higher fees or a higher interest rate.  The fees may come in the form of closing costs.
The first step is to begin comparing rates. Present rates are incredibly low, so even though you may be at a higher rate, by doing a little shopping around, you will find a good deal.

Things to avoid:

1. Any loan with a prepayment penalty for people with bad credit.
2. Any predatory lending
3. Any lending that has a variable APR.

One good tip is to simply wait and work to improve your credit score and then get a loan at a lower interest rate.  Some bad credit mortgage loans carry a pre-payment penalty, so make sure your loan doesn't have one. These bad credit mortgage loans have 6 months to 2-3 years pre-payment penalty. This means you have to pay huge sums of interest for at least 6 months before you can pay off the loan. If there is a pre-payment penalty you should take the loan that has the shortest term so that you can pay off the loan quickly without paying any penalty.

You may also want to consider these products.
Bad credit refinance loans
Bad credit home equity loans
Bad credit home purchase loans
Bad credit debt consolidation loans.

Myths about bad credit refinancing

There is a lot of bad information out there. If you have bad credit and are shopping around for a refinance or a mortgage you may run into some of this.  It is vital that you are educated because of this bad information.  I've had reputable bad credit mortgage lenders and refinancing specialists tell me some of this.  Here is the truth.

• Closing accounts - Your mortgage lender may tell you to close out some accoutns to improve your bad credit score in order to get you refinanced.  This is not true, the best option is to pay the balances down, not close them.
• Checking your FICO score will harm you - Again ordering a copy of your credit score does not harm you.  But applying for new credit does.
• Credit counseling will harm your score - This is just not true.
• The FICO does not matter - This score is what lenders base 75% iof their decision on.

5 Things to look for in a lender

In your search for a bad credit mortgage refinance here are 5 things to look for in a lender.  Avoid bad credit lenders who don't meet these requirements.

1. References - ask the lender for a list of people they recently did a mortgage refinance for that you can contact.  Then contact them!
2. Listening - Talk to the lender and be sure they understand your credit situation.  Many lenders who specialize in bad credit mortgages will be very interested in your exact situation and how they can help. Avoid a lender who doesnt' seem to care about your unique situation and just "pushes" a product at you.
3. Terms - Bad credit mortgage refinancing lenders are required to give you all the terms of the loan.  Ask them about fine print.  Ask tons of questions over and over.
4. Business History - Large numbers of bad credit refinancing lenders have come and gone.  Check their business history, how long have they been lending? How long have they been in this city/state?
5. Personal Contact - You will probably deal with a bad credit mortgage specialist.  This person will give you a business card and should follow up with you periodically through the process.  If you have trouble contacting this person you should look elsewhere.