3 Things That Will Cost You Money on Your Bad Credit Refinance
11/04/2011
If you have a bad credit score and plan to refinance your home, be aware that some items on your list of expenses will cost you more that if you had great credit. If you want to save money, the solution is to simply wait to refinance your home until you've repaired your credit. But if you need to refinance immediately, be prepared to pay extra on the following things.
1. Interest rate. If your credit score is less than perfect, you won't be able to take advantage of the best mortgage rates available. Your rate will be much higher than the lowest of the low, and you may in fact find that a refinance isn't even financially wise. Be prepared for this.
2. Private mortgage insurance. You will likely be required to pay for private mortgage insurance if your credit score is bad enough. This will add an extra monthly cost to your mortgage payment, or you may have to pay for a year of premiums up front.
3. Underwriting costs. It will cost more for the lender to underwrite your loan, and this cost will be passed along to you.
Again, the wisest decision is to put off your refinance until you've had a chance to repair your credit. This is the most sure way to save money.
