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Step 1
The first question that you need to ask yourself is what is your credit score. In the past, almost anyone that could sign their name could close on a mortgage, and now banks and lenders are tightening up their rules on who they will lend to and how much. If you do not have a stellar score, they may not do business with you.
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Step 2
Now that you know your FICO score is high enough, you should know if you have enough money for closing costs, or possibly even a down payment. Five percent down may not be enough anymore, and some borrowers may not allow you to roll your closing costs into the loan. For this reason, you need a substantial amount of cash up front, and possibly some money put to the side, as they may want to know your debt to income ratio.
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Step 3
The final question to ask yourself is will it be worth it to refinance your mortgage. Of course, if you are in an ARM (adjustable rate mortgage) and are paying well over today's prime rate, and you plan on living in your home for many years to come, you may never see a better time to refinance your mortgage. If you are one year into your mortgage, plan on moving in a year or two, and you currently have a low fixed rate, you may not recover the closing costs you paid before you sell the home and move.
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Step 4
Now that you have decided on whether or not a refinance is right for you, the hard part is yet to come. Now you have to find an honest lender that will treat you right, treat you with respect, and have the money to lend to you! Good luck!
Comments
jenniferclaerr said
on 8/14/2009 Good tips on deciding whether or not to refinance your mortgage. Thanks!