Home Page

About Us

Security & Privacy

ToS

Add Your Link

Add Your Article

Search:



News & Events

Home Family & Garden

Technology & Science

Software & Networking

Eating & Drinking

Property & Agents

Entertainment

Fashion & Relationships

Self Management

Law & Politics

Sports

Society & Issues

Companies & Business

Healthcare & Treatment

Art & Creative

Vehicles & Automotive

Teens & Kids

Academics & Learning

Tour & Travel

Careers & Employment

Malls & Shopping

Online & Board Games

Health & Therapy

Finance & Investment

Home Page –› Finance & Investment –› Mortgage & Property Loan

Mortgage Tips: Pros and Cons of Refinance Loans for People with Bad Credit

Author: Nick Rian

If you're stuck under some high credit card bills and your credit rating is slipping, one of the best ways to immediately improve your credit is a home equity loan. When the loan closes, home owners have cash-on-hand to pay off bills. The result: their credit rating starts to improve immediately.

Banking executive Dan Ambrose refers to those as the 'band-aid loan', also known as the 2/28 in mortgage lingo.

'Most sub-time loans are short term loans, not A paper market, which means a fixed rate for two years then the loan adjusts.'

He's talking about 30 year refinancing mortgages for people with less than stellar credit. Lenders offer a home-equity loan at a set interest rate for two years, and then the loan converts to a variable rate loan, where the interest rate fluctuates with the prime rate at the time.

That's the down-side to the 'band-aid loan.' Lenders usually charge higher interest rates for people with lower credit scores. Dan warns consumers to prepare themselves for when the loan converts. Home owners could face a higher interest rate than the original home loan, and their monthly payments could hit them harder.

If consumers take the cash from their equity loan and pay-off their bills in full, after 18 months of perfect mortgage payments, Dan says the consumer's credit improves to the point that 'now every bank will deal with them.'

If you think a home-equity loan could save you form your creditors, watch out for the current housing market in your area. 'Watching the marketplace, I saw the writing on the wall', says Dan. 'The real estate values are going down. They're starting to slow down drastically.'

And there's the other potential roadblock for homeowners in this situation. Lower home values means less equity and possibly not enough equity to satisfy their payment needs. If the equity isn't enough to pay all of your bills, and after two years your payments are even higher than before, you could possibly put yourself in a worse situation.

'People with marginal credit or no equity do have some options such as the 125% loan to get ahead.'

A 125% loan offers you a loan for more than your home is actually worth. Talk to a mortgage professional to make certain the credit risk is worth the return. Dan says most importantly; use the equity cash to pay-off those bills before you splurge on your dream vacation.

Author Bio:

Nick Rian is an award-winning journalist who has many published articles about real estate and finance. You can get more information about credit and refinancing and read more of Nick??s articles at Mortgage Refinancing and Credit. If you need more advice for lowering your payments, check out Debt Consolidation Loans and get more information about and refinancing for people with less than perfect credit. Look for great interest rates on credit lines and www.nationwidemortgages.net/second_mortgage.html">second mortgages with no application fees.

You can also reach this article by using: Mortgage Tips: Pros and Cons of Refinance Loans for People with Bad Credit, Finance & Investment

Buying a Home After Foreclosure - What to Expect

Military Loans Explained Simply

Tips for Finding the Best Loan for Your Needs

Accident Compensation in the UK: The Basics

Is Consumer Spending Trapping You in the Rat Race?

Home Improvement Loans Bring Comfort And Luxury To You

Reduce Your Debt Repayments-Ask For OnLine Debt Consolidation

What You Need To Know About Mortgage Brokers And Loan Officers

Do you need Consumer Debt Solutions?

Help! My Friend Wants Me to Cosign A Loan

Home Page >> Security & Privacy >> ToS

Mortgage Tips: Pros and Cons of Refinance Loans for People with Bad Credit

Related Articles