Did you not refinance your mortgage yet? If not, you should know that the days of 2.5% mortgages are probably behind us. However, rates are still historically low, so you should take a strong look at refinancing your mortgage in 2020.
Here are some good reasons why you should strongly consider a home refinance with bad credit soon:
New Programs with Eased Credit Requirements
There is some good news for people that have had difficulty qualifying to mortgage refinance with bad credit. Many lenders have announced increased flexibility to refinance with bad credit with programs backed by FHA, VA, Fannie and Freddie. Even subprime lending institutions have begun advertising new programs for people with damaged credit for people that have 580 credit scores. If you have a credit score below 600 it’s worth taking a look because it is not always easy to refinance with bad credit.
Rates for Mortgage Refinancing Are Going Up
We have been hearing for several years that rates would start to climb, and little happened. But by the end of 2016, rates did indeed start to ratchet higher. The Federal Reserve finally raised its rate and this led to mortgage rates to go up a bit.
As of mid 20120, interest rates were often under 3%. Now, rates are in the low 4’s. Some experts think we will hit 3.125% by September of 2020, and even a few think we could see 3% rates in 2021. The conventional wisdom is that you should refinance if you are paying 1% or more than whatever the current rate is. If that is you, we would advise you to talk to your lender about refinancing. By locking in a rate that is 1% lower than what you pay now, you can cut your monthly expenses significantly, perhaps by hundreds of dollars. According to Freddie Mac, rates on a home refinance with bad credit remain relatively low.
Home Prices Are Going Up
Mortgage rates going up will often encourage buyers who were sitting on the sidelines back into the market. If many of these potential buyers hit the market at once, the housing inventory shrinks and prices go up. This can lead to a higher price for your home. That’s great news for you.
If your home goes up in value, you can often get better loan terms because the appraised value is higher and your mortgage balance lower. Also, if you have more than 20% equity, you often can get rid of the private mortgage insurance on your loan. That can easily cost you an extra $100 or $200 per month.
A higher home value also may give you the option of pulling out cash to renovate your home or pay off debt.
Rising Prices May Tail Off
Experts report that home prices increased 9% in 2017, but they are expected to go up only 3 to 5% or so in 2018. So, you may not want to wait too long before you refinance your home because one never knows when they may start falling.
You May Be Earning More
Reports from the US Labor Department indicate that job hiring is strong and wages have been rising for the last year. This means you may be earning more than you were a year ago, so you could be a better candidate for mortgage refinancing. You also may use some of your extra income to pay down debt, which increases your credit score, and can improve your mortgage interest rate.
More Mortgage Credit Is Available for Home Refinancing
There has been fairly bright economic news in recent months as hiring is increasing and people are making more money. Home prices have been going higher, too. This means that more mortgage credit is available to homeowners than in the past. People all over this great nation want to know how to get a refinance mortgage with bad credit: If you are excited about finding a source for a mortgage refinance with bad credit scores than keep reading this article, because there are new opportunities available to more people just like you.
In December 2017, the Mortgage Credit Availability Index went up .6%. This suggests that the credit markets are loosening and it will be easier for people to get a refinance or a new loan.
In 2018, we are noticing more lenders and brokers advertising bad credit refinance mortgages. Generally, the index suggests that credit to buy or refinance a home is 7% more available than it was in 2017. Thus, poor credit mortgage lenders are more likely to take on higher risk, especially with interest rates higher.
You Are Staying In Your Home
Whether you should refinance or not also depends upon how long you plan to live in your house. Are you thinking of moving within a year or two? You may not benefit sufficiently with the refinance if you are going to sell within two years. Remember that bad credit refinancing costs money in terms of closing costs and fees. It can take a few years of lower mortgage payments to make up for what it costs to take out a new mortgage. But if you think you are staying in your home for years to come, you could be a good candidate for a home refinance loan. Read, How to Get a Home Loan with Poor Credit.
You Have High Interest Debt
If you have a lot of credit card debt, you may want to consider refinancing your mortgage now and possibly pulling out cash. This can help you to pay down that high interest debt with much lower interest debt. A major benefit of paying off your credit card debt is that you can usually write off the mortgage interest that you pay on your taxes. That can drop your tax bill quite a bit come April 15.
There are many good reasons to refinance your mortgage in 2020. Bad credit mortgage rates are not as low as they ever were, but they are still low. We do not expect these low rates to last for very long, so we advise you to get a home refinance with bad credit as soon as you can.