Many consumers who want to refinance anxiously make an appointment with a loan officer, and just hope for the best outcome. But those who understand what lenders look for, and how to take steps to ensure that their mortgage refinance applications will be processed with smooth sailing and a prompt turnaround, can make the whole process work in their favor, right from the start.
Here are some basic tips for preparing to refinance your mortgage:
- Clarify your objectives. Decide how much you'd like to borrow, how long you want to keep the mortgage before you sell or refinance again, and whether you want a fixed rate (which works best for most consumers now as rates are rising), or an adjustable rate.
- Examine your credit report. Get a complete copy of your credit report and check it for outdated information or outright mistakes. You may have canceled those credit cards, or paid off that student loan, but the report may not show such information. It can take just an hour to review your report, and the time can save you thousands of dollars by helping you get the refinance terms you want. But do it well in advance, because it can take 60 to 90 days to identify mistakes to reporting agencies and get them corrected.
- Know the score before you get in the game. Your FICO credit score estimates the probability of your making payments on time, based on your prior payment history. If you have a score of 620 or above, you'll probably get a low interest rate. Lower scores mean that refinancing will probably cost you more, so you may need six months or so to work on improving your rating before you apply for the refinance.
- Get your ducks (and docs) in a row. Certain documents-like bank statements and tax returns-will be needed to evaluate your financial standing. Find out what the lender needs, and bring it to your first appointment. Your lender will appreciate it. Plus, doing so will probably speed up the application process.
- Shop around. Shop at least three different lenders before deciding where to take your refinance business. Let them compete by offering attractive terms or discounted rates and fees, and you'll be the winner.
By following these tips, you can help your loan officer move the process along, and likely avoiding hitting a paperwork snag. Remember, the faster they can process your loan, the faster the funds will be delivered to you.
By MortgageLoan.com
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