How to Obtain a Refinance
Obtaining a refinance can change the conditions of your present mortgage loan, such as the interest rate, length and mortgage payment. Borrowers generally submit paperwork for a refinance when mortgage rates decrease. However, taking advantage of an interest rate drop calls for meeting a mortgage lender's criteria.
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Instructions
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Keep a superb credit score to qualify for a prime interest rate. Closely monitor your credit score prior to applying for a refinance. Use Myfico.com to order you personal rating. A score of 680 qualifies you for a refinance, but a score of 740 or higher helps secure a low-rate refinance. Maintain a good payment record and lower your balances on loans and credit cards.
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Collect documents to confirm your present income. Lenders require borrowers to submit information, such as bank statements, tax returns, W-2s or 1099s as evidence of monthly or yearly earnings.
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Clean up your credit report. Get your report from Annual Credit Report. If you have charge-offs, judgments or collection accounts, satisfy these delinquent accounts to help you obtain a refinance.
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Research mortgage quotes. Obtain a free refinance quote from the lender that currently holds your mortgage loan, and then talk with a broker to get quotes from the competition. Compare your free quotes and choose the loan with the most favorable terms.
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Wait for your home appraisal. The appraisal organized by your home lender determines if you're eligible to obtain a refinance. Depending on the type of mortgage loan, you will need a minimum of 3 to 20 percent of equity to qualify for a refinancing.
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Tips & Warnings
Closing costs on a mortgage refinance are approximately 3 to 5 percent of the mortgage loan balance, says Bankrate.com.
