How to Refinance in Maryland
When you have been making regular payment on your home loan in Maryland, you may be interested in taking advantage of some of that equity that you have built up in the home. By refinancing your mortgage, you can do that. Refinancing can be used to consolidate some of your debt. It can also be used to take advantage of lower interest rates and lower your monthly housing payment. Refinancing a loan in Maryland is a similar process to any other state.
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Instructions
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Inspect your credit reports to look for any errors that need to be corrected. Each credit report has a different dispute process, which you need to use if you discover any errors. The dispute process is listed on the credit report. Each year you can get one credit report for free from each of the three credit bureaus on the Annual Credit Report website (see Resources). If you do have to dispute something, wait until it is corrected before moving ahead with your refinancing. Disputes typically take one month to resolve.
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Contact your current lender to get the pay off amount for your loan and the interest rate, if you do not already know it. Ask if there are any pre-payment penalties, if you don't already know this as well.
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Check the mortgage refinancing rates for Maryland on sites such as Bankrate and Mortgage Loan (see Resources). Rates fluctuate regularly, which means you need to check them daily to identify the best rate. Rates for Maryland are typically different from the national rates, so make sure you are only looking at state rates. Look for a rate that is at least 2 percentage points lower than your current loan rate.
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Get quotes from local lenders in Maryland such as your local bank, Choice Finance in Rockville and Capital Quest Mortgage. Use Lending Tree (see Resources) if you want to get a mixture of local and national quotes by completing just one quote form. Remember to also get a quote from your current lender, if you are happy with them.
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Compare the quotes that you get to see which lender is offering you the best refinancing option. Pay attention to the interest rate and the closing cost amount. While the interest rate helps to lower your payment, the closing cost should be considered in terms of how many months must you stay in this home to break even. For instance, if you have a quote where the interest rate results in a monthly savings of $300 with closing costs of $2,000, then it would take seven months to break even on the refinancing. As long as you plan on staying in the home for that period, you have a good deal.
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Complete an application for refinancing your loan with your Maryland lender of choice. For the application, you need to know the pay off for the current loan, the current lender's contact details, your current loan account number and the estimated value of the home. You are also required to show proof of income. Exact requirements vary by lender but include W-2s and paycheck stubs. Minimum credit scores also vary by lender.
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