Are you wondering what refinancing is? Would you benefit from it? What about loan modification? These questions are just a few of the big ones that nearly every homeowner must face in this economy. Refinancing can be a great option to consider if your mortgage is starting to feel just a little too burdensome and you fear the possibility of foreclosure. However, it’s important to remember that refinancing won’t fix all scenarios.
Refinancing: What to Know
Essentially, when you go through the refinancing process you take a debt obligation – in this case, your mortgage – and replace it with a new one that has more agreeable terms. That’s to say, you don’t actually do anything to your mortgage. Rather you replace the loan you currently hold with a different one.
Before you even consider this option, it’s very important that you have a good credit score. This is a new loan, so it’s the same story here as it is with any other loan. Having a good credit score means getting better rates and better payment plans. Even if your lender “knows you,” and even if your lender already held the loan you’re now replacing by refinancing, he’s still going to perform a credit check.
Having a good credit score can insure that you don’t waste anyone’s time, including your own. If you don’t think you’ll be able to secure a better loan through refinancing, you might want to take care of your credit score first. Once you have boosted your credit score back up, then you can turn your attention to refinancing!