Home Refinancing for People with Bad Credit – How to Avoid High Fees

Avoiding high fees when home refinancing with bad credit is as

important as finding low rates. With fees adding up to thousands of dollars,

make sure that you are getting the best deal by comparing lenders. Also

look at other types of credit to securing cash out financing.

Ask About Closing Costs And Fees

To save yourself money, research lenders before settling on a refi

loan. Request loan quotes that include information on closing costs and

fees. The APR will include the interest rate, closing costs, and any

annual fees. But be sure to also ask about early payment or any other fees.

Be aware of fees or closing costs that are included as part of the

principle. These are often labeled as “zero down” loans, but in reality you

are paying for those fees throughout the loan.

With loan quotes, know that even the fees are negotiable. You can ask

for them to be removed or eliminated. Some fees, such as the early

payment fee, are only removed if you pay an additional amount at closing.

Select Low Fee Terms

While you are researching financing companies, also take a look at how

they structure their loans. Often the lowest rates, such as interest

only or balloon payment loans, have the highest fees.

Select terms that are more favorable for low fees, such as fixed or

adjustable rates. Adjustable rates are usually the lowest costing loans

with some risk of increasing future rates.

Other Ways To Cash Out Your Equity

If you are simply refinancing to cash out part of your equity, consider

applying for different types of credit to save on fees. Second

mortgages and lines of credit have much lower closing costs than refinancing

your total mortgage. They can also be held for a shorter period, which

also saves you money.

While low fees may be your goal, be open to better financing options.

By comparing the APR, you may find that average fees can yield better

rates that will save you money. The longer you keep your loan, the more

important low rates will be.