Its hard to look at todays rates and not wonder if its time to refinance your mortgage. You also might be asking yourself if you have the credit ranking, and financial ability to do so. This economy has affected everyone, and having a lower mortgage payment might be what the financial doctor ordered.
The refinancing process can be a little overwhelming, even for those with mortgages. That’s why we want to help get you ready, making the process simpler and less stressful.
Here are 5 things that will take you less than an hour to gather, and will give you a leg up when applying for your mortgage application:
1. Locate Mortgage Documents. Believe it or not, this is the number one time waster in refinancing a mortgage. Most of us don’t know the basics of our mortgage, other than our monthly payment. However, your mortgage broker needs several more critical pieces of information to search out the best mortgage deal for you. They need your current mortgage rate, the type of rate (adjustable or fixed), how long it is financed, I could go on and on, but here’s the deal find these things:
* Your copy of the mortgage closing package
* The last couple of monthly mortgage statements
* Property tax documents (probably filed with your taxes)
2. Check Credit Reports. Your credit score is going to be the centerpiece of your mortgage qualification. Good credit scores get lower rates and better terms and bad credit scores get higher rates and worse terms. That’s just the way it works. Therefore, it’s critical that you know where you stand so you can either fix it or at least go into the process with your eyes open. Either way you will be able to use this information (your credit score and report) to compare online offers and fix any mistakes before you ever talk to a mortgage broker.
Here are some reputable websites to get quick and cheap copies of all three of your credit reports:
* TrueCredit
* MyFICO
* CreditReport.com
3. Check Property Value. Home values have all gone in the tank over the last few years. Assuming you home has appreciated or held its value from the time you bought it will set you up for clinical depression. So check what the market estimate your home is worth–cry a little, have a glass of wine, freak your neighbors out–then get over it and strategize how to overcome that challenge. A good mortgage broker will be a good guide (and therapist) to minimize this negative.
Here are some good places for quick (probably inaccurate, but gives you a ballpark) estimates:
* Zillow
* Trulia
* Cyberhomes
Check all. You will see that they vary wildly, but looking at recent home sales in your area will get you in the ballpark and avoid later panic or disappointment.
4. Go Over Income Statements (w2, 1099,etc.) Okay, this is where you have to be honest with yourself before you get connected with a mortgage broker–Do you have a good, stable job?
Your broker is going to ask for the last couple of months of pay stubs or last two years of income tax returns. Do you have these? Do they show consistent income? Will they support your current debt (credit cards, car payment, school loans) and your mortgage? If you answered, “Yes,” then you are off to the races and will be able to qualify for most conventional mortgage options.
If you answered, “No,” then you are not out of the game for refinancing your mortgage; however, you probably need to be prepared for more unconventional approaches, like a loan modification.
5. Check your bank account. Is there money in there? It sounds like a silly question, but it’s very important. The bank or broker is going to be looking for documentation (bank statements) that indicate you have reserves (back-up savings) and enough cash to pay for closing costs. Make sure you have the funds in a checking or savings account that you can show. Dramatic changes in account balances during the mortgage process only makes mortgage people nervous. Get the money in there now and leave it there until you have refinanced your mortgage.
If you have completed this mortgage refinance checklist than you should be in great shape to begin the application process. Next, contact your trusted lender and soon enough you will be on your way to saving money on your monthly payment.