Are You Really Prepared for That Refinance?

As mortgage rates are getting better each day, many homeowners are getting in line to refinance their own mortgages for better rates. While it can be great for you to refinance your old mortgage, there are some things you need to know before you fill out the application. If you go into a refinance not fully prepared, you may risk mistakes and ultimately a denial. Many people are taking advantage of the low rates but the lending industry has changed a lot in recent times. There really is no such thing as instant approvals. You need to know what you are getting into.

Here is what you need to know:

Check On Your Credit
Lenders no longer approve most applications but rather fully investigate your credit report before making a decision. You’ll want to make sure you know what your credit score looks like before the lender does. If you have any smudges on your report, you’ll have time to clean them up before you complete your application, giving you a better chance to be approved the first time around. Lenders are no longer taking chances on credit risks so make sure your credit score is excellent or better before you go. If it isn’t, wait until you can bring up your score.

Check On the Value of Your Home
In addition to your credit score, you’ll want to check out the change in the value of your home since the recession hit. You want to make sure that your home value hasn’t decreased significantly over the years, leaving you without equity in your. If the value has dropped dramatically, you should hang out for awhile until home values come back up again.

Get Organized
Like we mentioned, lenders are no longer up for the instant approvals. They want to review and make sure your have your ducks in a row. Lenders will want proof of your income, copies of your taxes, and any other financial details they deem important. Having this information in an orderly manner will help show lenders you are serious and ready to finance. It will also help move the procedure along so you can be sure to get the best rates possible and not waste any time.

Is the Grass Greener?
Today’s low interest rates are good but make sure that what you have isn’t just as good or better. If your current interest rate is a bit higher but you are able to pay off your mortgage sooner than a refinance deal, you might want to stick with what you have. You also want to think about how long you plan to stay at your current residence. Hardly seems worth the trouble of refinancing for 30 years when you plan to move in 5.