So you wish to apply for a Colorado refinance. Problem is, you are totally new to the whole business and are totally ignorant, even of the basics. What you need is a quick introduction and that’s exactly what you’ll get if you read on.
Refinancing is the process of transferring to a new mortgage agreement or to a new lender. You use your new loan to pay off the old one. You usually get through the whole process to take advantage of better interest rates, to lower your monthly payments, or to extend your mortgage terms.
So when is the right time to refinance? You must take a look at the Colorado refinance rates. You must only refinance when the rate you’ll be getting is at least 2% lower than your current mortgage interest rate. So what determines the interest rates? It’s a combination of the effects brought about by a number of factors. Included in the list are the economic growth, the inflation rate, and the Fed funds.
Bad Credit Refinance Mortgage
Are you worried about your ‘not so good’ credit report? You don’t have to worry about that either. As a matter of fact, a Colorado refinance may be the salvation you’ve been looking for. It holds the potential to liberate you from your debts. How so?
Have you heard about consolidation of debts? This is a strategy used by many borrowers. It’s all simple. You refinance your mortgage and use the loan to pay off your other numerous debts. It’s actually a good set-up.
This Makes Your Lender Much More Generous
You see, your Colorado refinance is a secured loan, as opposed to your burgeoning credit card loans. And because it is secure, your lender is much more generous in terms of interest rates and monthly payments.
What is a secure loan? Your mortgage loan is secured by your home, which serves as your collateral. Your lender holds the right to foreclose your property in case of non-payment. This gives them more leverage and more room for generosity. Now that spells better deals for you.
Your Lender Holds a Lien
Since your lender holds a lien on your home, he or she is more willing to give you lower interest rates. And because you are dealing with a lower interest rate, you also get to reduce your monthly payments. These two come hand in hand. The problem is, they could mean overextended mortgage terms, which may result to more costs in the long run.
Even so, a longer mortgage term (though more costly) may still be beneficial in that they make your monthly payments more manageable. This way, you get to keep up with monthly payments, avoiding loan crises. This may be worth the costs you bear in the long run.
Numerous benefits await you with a Colorado refinance, especially now that the competition among lenders has become stiffer than ever. Keep searching for more information and resources and be ready to grab a good deal.