Home Mortgage Refinancing Guide

Don’t let bad credit stop you from refinancing your home loan. There are many options available making it possible for you to refinance and even get cash back.. Even if you have a history of foreclosure and bankruptcy on your credit report, you still have options.

You do need to realize that with bad credit you will not get the same types of loans or mortgage rates as someone with perfect credit would, but it is still possible for you to receive a fair deal. The very first thing that you will need to do is to get copies of your credit reports. Your credit score derived from these reports will be a big factor in determining the loan and the mortgage rates that you can receive.

Normally, the lower your credit score is, the higher your mortgage rate, closing cost and origination fees can be. Since this is such a big part of determining what your interest rate and the type of loan will be, you want your score to be as high as possible. There are steps you can follow that will allow you to improve your credit score fairly quickly. You will not be able to make a lot of improvements in a short amount of time; however, every little bit will help.

Review your income and debts to see how much income you would actually have left to pay on a home loan. This is an important step and it is imperative that you do not leave out anything that you pay on. You should even consider the amount of money you spend on gas, food and other necessities to have an accurate figure. This will give you an idea of how the lenders will review your loan application. If your income is not high enough to actually pay back a loan, then you could be denied. On the other hand, if you have adequate amount of income you have a very good chance of getting a home loan.

Keep in mind that the less you borrow when refinancing the lower your monthly payments will be and it can also reduce the rates you will be charged. You’ll need to factor this into your decision to take cash back at closing. Even though you can expect to pay a little more for your home loan if you have bad credit, you still shouldn’t take the first offer you receive. Shop around a little and compare lenders to make sure you are receiving the best loan available. There are some lenders that will take advantage of people with bad credit and others that will offer reasonable rates for your loan.

The first thing you should know about getting the best deal when refinancing your home loan is that you cannot bypass the middleman to get a wholesale rate. It doesn’t matter which wholesale lender you try and contact when refinancing…every lender has retail divisions that deal with the public. Here are the basics you need to know to qualify for a wholesale mortgage rate when refinancing your home loan.

You’ll Have to Use a Broker

If you want wholesale rates there’s no way around working with a mortgage broker. Banks and credit unions never offer their customers wholesale rates and the big Internet lenders you see are simply banks pretending to be something they’re not. So what is a mortgage broker?

Mortgage brokers are simply loan originators that do not fund the loans they close with their own money. They are basically salespeople reselling mortgage loans for wholesale lenders. Your mortgage broker gets paid by charging you an “origination fee” and from a “rebate” paid by the wholesale lender. Lenders reward mortgage brokers for marking up the interest rate you qualified and closing your loan with above market rates. This rebate paid by the lender is called Yield Spread Premium and you’ll need to avoid it if you want to refinance with a wholesale rate.

How Yield Spread Premium Works

Suppose the mortgage you are refinancing is for $300,000. Your mortgage broker locks and closes your loan with a mortgage rate of 6.5%; however, what the broker doesn’t tell you is that you qualified for 6.0% mortgage rate. Because your mortgage broker locks and closes your home loan .5% higher than necessary this creates 2% of Yield Spread Premium for the broker. Your mortgage broker pockets $9,000 in addition to the fees you’re already paying for overcharging you.

Finding the right mortgage broker to originate your home loan without lining their pockets with Yield Spread Premium is a skill you can easily learn. Give me an hour of your time and I’ll show you how to refinance your home with a wholesale mortgage rate without paying garbage fees with free videos…Register for yours today.