When trying to put their finances in order, many people try to use the equity in their homes as a means to consolidate their debts so as to lower their payments on their monthly bills. Besides that, many homeowners are attracted to lower rates and therefore seek to refinance their mortgage to take advantage of the lower rates.
Except for a very few states like Texas and Maryland, refinancing is generally the same for all states in the United States. Home refinancing is very easy for people with good credit scores, but it may be difficult for someone who has issues with regards to their credit history. It is not impossible though--there are many companies that will offer refinancing and loans no matter what your credit rating looks like.
If you have bad credit, refinancing will be a bit more difficult. With bad credit, interest rates will typically be much higher because California lenders would regard you as a high-risk borrower. Make sure that the rate you are getting is still lower than what you are currently paying and that it is low enough to make a difference in terms of your time, the costs to refinance and the new payment.
Where do you find refinancing then considering your situation?
- If you've had a good experience with your previous California mortgage broker, it is best to talk or go to them first. The advantage of this is that he already knows your circumstances and he has your personal information and your loan file, which will save time in processing the refinancing. Going to another broker will mean you will need to bring a copy of your current ‘Note' and if you don't have this on hand, it will take some of your time looking for it. Discuss your reasons for refinancing and let your broker check out your options. He will also be able to guide you to clean up your credit.
- Go to the Internet to get leads and get multiple "no-obligation" and free refinance quotes from various California lenders that are competing to offer you the lowest rate and best terms possible that will match your situation. Ask about their fees. In today's environment, online lenders make the search very easy. Carefully weigh the advantages and disadvantages of your options. Especially, consider your savings. If the overall savings are marginal, refinancing might not be a good option or refinancing now might not be the best time. Maybe you need to consider fixing your credit first before refinancing.
In preparing for refinancing, be sure to get all your papers ready. Gather your 2-year tax returns, copies of W2s from the past two years, your most recent pay stubs and at least two months bank statements. You will also need to get a most recent copy of your mortgage statement, your homeowners insurance and your property tax bill. The lender will probably need other paperwork than these, but these should help your broker to initially decide if refinancing will be beneficial to you.
Make sure that you check all the conditions and agreements before signing anything. There are so many mortgage and refinancing firms cashing in on this trend that the very few unscrupulous ones sometimes get by undetected and prey on unsuspecting individuals.