Is It Time to Refinance Your Mortgage Loan?

By Sheryl Landrum
Mortgage Credit Problems Columnist

One way to repair your bad credit is to refinance your mortgage loan. If you have bad credit you may be looking for any way you can to save money on your mortgage get cash for debt consolidation.

Do You Have an ARM?

If you have an adjustable rate mortgage (ARM) that has recently reset or is scheduled to in the near future, you may be sweating at the thought of trying to keep up with rising mortgage payments. About $1.1 trillion of first lien mortgages on single family homes are expected to reset in 2007, according to Fannie Mae. Doing a mortgage refinance with a 15- or 30-year loan could help you get your payments under control.

Are You Late With Loan Payments?

About 3.56% of mortgages in the U.S. were at least 30 days past due during the month of August, according to data from Equifax and Economy.com. Since August 2006, Florida, Arizona, Nevada, California, and New York have had the largest rise in the rate of foreclosures because of problem loans.

How Much Will a Refinance Cost?

While many people just focus on the interest rate they'll receive on a mortgage refinance, there actually are other fees that you need to consider. Add up the cost of points, loan origination, the application, appraisals, private mortgage insurance, and other fees to see the total cost of refinancing your home loan. You'll also want to evaluate how long it will take you to break even paying these costs. If you plan to sell your home before this break even point, refinancing may not make sense.

Sources
Wall Street Journal "Late Mortgage Payments Continue to Climb," by Ruth Simon.
Move "Should Your Refinance? The Arithmetic of Refinancing," by Broderick Perkins.

About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding in Carlsbad, California and a freelance writer specializing in the mortgage issues.

Refinance Quote

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