When you feel like you can make use of mortgage refinancing as a means to get to the credit happy zone again following a bankruptcy, it can be difficult for you to know that it’s the right thing for you. It can also be quite frightening. For a few people, doing this can offer a great deal of financial advantages, and for others, it might never be worthwhile. You should think about using a refinancing mortgage offer after you ask yourself these following questions:
• For how long do you plan to be in the house? Is it long enough to make refinancing worthwhile?
• How much higher will the interest rate be on your new loan thanks to your new found bad credit?
• Are you already paying for private mortgage insurance or not?
• How much will the closing costs be on the new loan?
• Are there any additional charges and fees that will make the loan less affordable to pay back?
• Does the amount of equity that you have built up make an equity refinance loan more approachable?
• Do you plan to do cash-out refinancing later on or not?
• Can you really afford it?
If you’ve been asking yourself whether or not mortgage refinancing is a good idea after you’ve declared bankruptcy, I already stated that it’s a great method for you to bring your credit back up more fast. Here are a few more general mortgage refinancing tips that may help to make the process a little more easy for you in the long run:
• If you don’t plan on staying in the house for a long time, refinancing might not be the right thing for you to do.
• Unless you’ve got an interest rate which is easy to handle, refinancing your home might cost you more money in the long run than you can ever completely and comfortably deal with.
• If you do take out a mortgage, you should keep your eye on the rates; especially if they’re offering variable ones as they will tend to change on you. Bad credit refinancing won’t offer you fixed rates.
• Choose a refinancing mortgage loan only if it can help you. If you can’t handle it any longer, you might find yourself back in bankruptcy or even worse.
• If you are paying a private insurance on your current mortgage, refinancing might help you to get rid of this additional cost.
• Closing costs when you have bankruptcy to deal with can be very bad. If you would like to refinance your home to help you get out of your bankruptcy nightmare, make sure you don’t forget how much the closing costs on the new loan will cost you, and make sure you can handle it.
When you are trying to make the most of bankruptcy mortgage refinancing, the most important decisions you make will involve interest rates and the lender that you choose to go through with.
More information on the next page of our guide on bankruptcy recovery: Mortgage Options 3
