3 Loans That Are Tough to Refinance

How to refinance: First, check whether your loan is owned by Fannie or Freddie and eligible under HARP 2 guidelines. If it is, contact the lender that services your loan to apply for the program. Be prepared to provide a lot of documentation, and don't expect an answer immediately. VA or FHA loans are easier to refinance, and you can contact any mortgage professional that offers those kinds of loans.

The alternative? Consider selling your home with a short sale, trying to get a loan modification, or even finding out whether bankruptcy can help make your mortgage affordable.

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Student Loans

Student loans aren't impossible to refinance, but it can be tricky, depending on the type of loans you have. If you have federal student loans, you may consolidate those loans once. The benefits are that you can consolidate multiple loans into a single loan, and loans with variable rates may be consolidated into a fixed rate with a repayment period of up to 30 years. However, you may also wind up paying more over the loan run, or you may lose important benefits such as certain interest rate discounts or loan cancellation benefits available for some types of loans.

If you have private student loans, you'll typically need a strong credit score and steady income to refinance those loans. Most private lenders will charge a 1 percent origination fee in addition to the interest rate that is charged.

How to refinance: Read the consolidation checklist provided by the Department of Education first. If you decide to proceed with consolidating your federal student loans, you can do so online through the government's Direct Consolidation Loan website. To refinance a private loan, you'll need to shop around. Finaid.org publishes a list of private student loan lenders who offer consolidation.

The alternative: If your federal student loan payments are too high, check out the Income-Based Repayment Program, including its new iteration Pay As You Earn. Both of these programs offer loan forgiveness after 10 - 25 years, depending on the program for which you qualify. And don't forget to research loan cancellation programs as well.

What You Need to Know Before Refinancing a Difficult Loan

To get the best deal, it's a good idea to be prepared before you start the process. Remember, you could be saving hundreds -- or thousands -- of dollars over the life of your loan. The time you spend preparing and comparing offers can be well worth it.

Know Your Scores: Lenders will check your credit score, so you should too. Check your credit reports and scores at least a month in advance, if possible, to give you time to fix any mistakes you find. Note, you probably won't see the exact score that your lender will use, but you can at least get an idea of where you stand.

Know Your Value: In the case of a car loan, you'll want to know the trade-in or wholesale value of your car before you start negotiating with a lender. In the case of your home, ask two or three real estate professionals for their opinion of the value.

Know What You Owe: Ask your lender for a payoff figure on the loan, which may be different from the balance shown on your most recent statement.

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