How To Repair Bad Credit By Refinancing Your Home Mortgage

One of the best ways to repair your bad credit is by refinancing your home mortgage. The difficult part is finding a lender for your home mortgage since your credit history is not good. Forget about the banks and other financial institutions, they will not probably accept your home mortgage. So how do we find a lender that does?

Well, the answer to that lies in subprime lenders. Most subprime lenders are willing to offer loans to people with bad credit history. However do note, it does vary from one lender to another and you may have to visit a few before finding one that does.

You can find subprime lenders on the internet, through your friends or the local business directory. Some lenders have acquaintances with other lenders and they can do a referral on your behalf.

Since subprime lenders are taking a high risk by refinancing your home mortgage, you may need to find a few before you find one that offers you the loan. Subprime lenders also have their own approval process not much different from banks and financial institutions. Your credit history, assets, gross income level, current debts etc are all taken into consideration when determining whether you qualified for the loan except that they have a higher threshold compared to banks and financial institutions.

They usually charge higher interest rates due to the higher risk they are taking, so even though you may pay more, in my opinion, the benefits of recovering from your bad credit outweighs the disadvantage of higher interest rates.

Do take note, this is a temporary solution as you still need your pay your monthly refinance on time. If not, you will be in a worse position. I recommend getting a refinance home mortgage loan more than what you currently owe so that you have some money to clear off your credit card debts, bills etc. That also helps in your credit repair efforts.

Ultimately, this method of credit repair still require you to manage your finances better. I would recommend to setup the refinance payments to automatically deduct from your salary every month. In this way, part of your salary goes towards repaying the refinance loan before you even have a chance to take out the money. Most banks can set it up for you free or you can use the internet banking system to do it.

Remember, the only way to repair your bad credit is to have good discipline with your finances.

Adverse Credit Mortgages - Advantages of Bad Credit Mortgages

Mortgages for those with adverse credit have advantages that conventional mortgages don’t. The prime advantage is that they are easier to qualify for, even with a bad credit history. Sub-prime mortgages also allow you to build wealth with your home purchase. And they have fewer hurdles, such as not requiring PMI.

Start Building Wealth

Bad credit mortgages allow you to start building equity wealth even if you have a bankruptcy or foreclosure in your past. With rates only a couple of points above conventional rates, you can get into a home with no or little down. For about the cost of a rent payment, you can enjoy tax deductions and home ownership.

Without waiting for your credit score to improve, you can buy a home at today’s prices. Even though no one knows for certain what prices will be in the next couple of years, more than likely they will be higher. You can see that appreciation by buying a home now.

Forgo Private Mortgage Insurance And Other Hurdles

Unlike conventional loans, you don’t have to carry private mortgage insurance with a sub-prime loan. So even with a down payment of less than 20%, you don’t have to worry about premium costs.

Sup-prime lenders are also more flexible with their requirements. Your cash assets, income, and credit scores can be less than favorable, but you can still get a mortgage. You can also choose more flexible loan terms of interest-only, jumbo, or adjustable rates.

Finding An Adverse Credit Mortgage

With more and more financing companies offering sub-prime lending, it’s easier than ever to find an adverse credit mortgage. A quick search online will yield hundreds of opportunities. Sifting through those results can produce some very favorable financing offers.

If you are overwhelmed with the choices, start with a mortgage broker. They sort through the plans to present you with the best selections. In some cases they also offer special deals, not found elsewhere.

Don’t worry about getting approved or not. Focus on getting the best rates and terms. Ask for loan quotes that include closing cost estimates to make comparisons. Also be willing to negotiate more favorable terms, especially to lower caps or fees.

Why Should I Make a Budget?

You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean every penny.

You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.

That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.

If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.

The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.

See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.

Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.

If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.

Avoiding Impulse Spending

Answer these questions truthfully:

1.) Does your spouse or partner complain that you spend too much money?

2.) Are you surprised each month when your credit card bill arrives at how much more you charged than you thought you had?

3.) Do you have more shoes and clothes in your closet than you could ever possibly wear?

4.) Do you own every new gadget before it has time to collect dust on a retailer’s shelf?

5.) Do you buy things you didn’t know you wanted until you saw them on display in a store?

If you answered “yes” to any two of the above questions, you are an impulse spender and indulge yourself in retail therapy.

This is not a good thing. It will prevent you from saving for the important things like a house, a new car, a vacation or retirement. You must set some financial goals and resist spending money on items that really don’t matter in the long run.

Impulse spending will not only put a strain on your finances but your relationships, as well. To overcome the problem, the first thing to do is learn to separate your needs from your wants.

Advertisers blitz us hawking their products at us 24/7. The trick is to give yourself a cooling-off period before you buy anything that you have not planned for.

When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home.

If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without. By following this simple solution, you will mend your financial fences and your relationships.

The Budget – The Ultimate Financial Management Tool

A carpenter uses a set of house plans to build a house. If he didn’t the bathroom might get overlooked altogether.

Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.

Not very smart of us, is it?

A money plan is called a budget and it is crucial to get us to our desired financial goals.

Without a plan we will drift without direction and end up marooned on a distant financial reef.

If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.

Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.

A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.

Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in “free budget forms”.

You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.