REFINANCING WITH BAD CREDIT How do you pay -off your mortgage early depends on your goals. Mortgage debt is tax deductible and hence its not something to get off your chest in a hurry. These tax savings alone offset lot of your taxable income on 1040 forms.  Therefore a careful analysis is needed to arrive at a decision, and if you like to pay off your mortgage early. Your age and retirement goals alone can determine if you should take such a step.


You can pay off your mortgage early by refinancing with  bad credit and getting  a shorter loan term. If you have a 30 year loan than switching to a 15 year loan cuts off the extra interest cost in almost half, that you would have paid over the course of the loan. The savings can be substantially in a 15 or 20 year loan.Your monthly payments will increase, but mostly that increase  pays off the principal balance of the loan !  The short term mortgages are available in 10, 15, 20 year amortization. The shorter the term the higher the payments and " forced saving”. If your income allows you to qualify for a short term mortgage than you can save thousands of dollars over the life of the loan. This suits many people who want to pay off and get out from under a mortgage early, or retire.

There is another type of savings with a short term mortgage. Its always at lower interest rate. Even though the short term mortgage is at  lower rate your monthly payments will be higher and that is a disadvantage for some borrowers who don't have extra cash flow. So you combine the lower rate and short term  to pay off the loan and take advantage of the savvy planning that you always dreamed of.


If you have credit problems than refinancing with bad credit or credit problems you may qualify for FHA loans.  FHA  loans allow you to refinance and pay off your longer term mortgage  provided you qualify for the higher payments. In addition your property needs to qualify with you. FHA has strict guidelines on types of properties and the condition. There could be addition repairs and improvements to be made to bring the property to FHA guidelines. You can discuss your bad credit refinance options with our loan team and  find out your options.




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