Keep studying the home loan market. You can guess the right time to refinance. You will know if the markets interest rates will increase or decrease further. If it looks like they will increase, you should refinance. Just don’t refinance because you are getting lower rates.

Here are a few pointers to help you to refinance your home:
People refinance to lock in lower rates, to lower their monthly installments and to save money. In the following situation you should refinance:

1) Compare interest rates: if you are paying more than 2 percent on your mortgage than the current rates, you should refinance. Do this if you are not leaving the house in the near future.

2) If the fixed rates are coming at a very attractive price and you are comfortable with it – refinance for a fixed rate mortgage. Please remember the rates can go lower. So be careful while choosing this option.

3) If you want a shorter loan period – you should refinance.

Now consider these points too if you want to refinance.

- if you have to pay a heavy prepayment penalty, refinancing will not be very beneficial.

- read full terms and conditions before refinancing. Hidden terms can take out the profits of refinancing.

- get the new loan rate locked in for a few months to get the full benefits. If the lenders increase the rates as soon the loan is closed, you miss out a chance to save money.

Financial planning is not rocket science. First make a clear goal. Like how much you may need after how many years and for what. You should also know how much you can save. Now once this is finalized, consult a financial planner and they should be able to help you achieve your goals.

Here is one example: say within 5 years you want to buy a house, a car maybe in 2 years, retirement after 30 years… so on. You should also write how much you want to save for these things.

Now you need to identify which of these goals are short term and which are long term. Break down the long-term goals into short-term goals in order to make them easier to achieve.

Once done do some research on financial plans. Abreast yourself with financial plans. It’s always good to read finance magazines and websites. You will get enough knowledge of what exactly your returns could be if you follow a certain financial plan.

Now its time to start the plan…

Every two years evaluate your plan. Nothing is perfect and in these two years you must have learn a thing or two. Implement them into your plan. Remove the bad ones and implement the good ones.

Half the battle is won if you start planning and investing. It’s never too late. If you want a secure financial future you must start and follow a financial plan.

It’s ok to take help from a debt settlement company, but you should be very careful. Debt consolidation or settlement companies promise to help you get out of debt by reducing your total debt to creditors by negotiation. In return you have to pay a fee to the debt settlement company. So far so good. But some companies do not do any negotiation or reduce your debt, but still ask you to pay the fee upfront before doing any job. This is a scam – avoid such companies.

You should also negotiate with a debt settlement company. For example if they ask you for a 10% fee of the reduced debt, you can negotiate for a 5% or 6% fee. More often than not, they will agree. That way you will save lots of money. Also do not prepay all the money. Pay 50% before the job is done and 50% after they do their job.

Some debt settlement firms take money from you to pay to your creditors on your behalf. Later you may realize that they just pocketed the money and never paid a cent to your creditors. In such a case ask for the bills of their payments every month to avoid such scam.

Research before you get into a contract with any debt settlement company. Some companies will ask you a lot of data before giving any advice. Don’t reveal all data. They might just want to steal your data.

Do business with only those debt settlement companies that are BBB registered. Mostly they are not scammers. Also research online about that company. Read reviews and then take a decision.

If you are in debt, you cannot afford anymore debt. Stop using your credit cards and do not take a loan even if the offer is great. Don’t even take a loan to pay your debt. You will get into further debt.

STEP 2: MAKE A LIST OF WHAT YOU OWE CREDITORS

You should know how much you owe. It may not be that easy, but you have to do the calculations yourself. List them in decreasing order of debt. This is important because the top 3 will take up your 90% of debt. If you can pay them off, you will virtually be out of debt. Then see how much you can pay every month.

STEP 3: REDUCE YOUR EXPENSES

Stop eating in restaurants. Yes that’s just one of them – the idea is you have to reduce your expenses.

Some other examples are:

- Reduce your Dish TV package to a lesser one.

- Go for a prepay plan for your mobile phone. This way you will know how much you can afford to pay as your mobile bills. And also go for the cheapest plan.

- Whatever you buy, bargain to reduce the price.

- Buy cheaper household things

- Get a cheap car insurance

… and many other things that can save you money.

STEP 4: PRIORITIZE YOUR REPAYMENTS

Contact a debt settlement firm. They are professionals and can help you get out of debt in the right way. They will tell you exactly what needs to be done in a phased manner to get out of debt. Debt settlement firms do charge money, but you will get a better deal than if you try to do debt settlement yourself.

• Assemble the copy of documents that you’ll need to initiate a mortgage refinance, including your last two to three months worth of paychecks, last two federal income tax returns, credit card statements, other loan statements, and savings and checking account statements. Keep a copy of the statements that prove any additional income that you receive each month, including rent or settlement checks.
• Once you have gathered all the above mentioned documents, call a mortgage lender or bank and explain that you are interested in refinancing to an FHA loan. It needs not to be the one currently servicing your mortgage loan. Confide your current financial situation in the lenders and don’t hide or distort any fact about your credit score.
• Send the financial paperwork and substantial documents to your lender. Your lender will assess them thoroughly in order to determine both your monthly debt and gross monthly income. To qualify for an FHA loan, your monthly debt, including your new monthly mortgage payments, can total no more than 41 percent of your gross monthly income.
• Permit your lenders to check your credit. In FHA refinances, though, the credit score is a deciding factor, it is considered less important than a borrower’s debt-to-income ratio. For FHA loans, borrowers usually only have to pay an interest rate about .125 percent higher than market rate.
• The next step is allowing your lender to have your home’s current market value appraised. In case your home’s value has dropped, your home equity level might not be high enough to qualify you for a refinance. Though traditional lenders usually require that you have at least 20 percent equity in your home before they’ll approve a refinance, FHA loans, though, do not require as much equity. It is better to ask your lender how much equity you’ll need to qualify for FHA refinance.
• Finally Sign the closing documents if you are approved for a refinance. This is the final step to make your new, lower mortgage payments official.

Keep in mind the above mentioned point and consider refinancing your mortgage even with a bad credit.