Are You Refi Ready?


Are You Refi Ready? - Even if you're only mid-way through the initial fixed period of your adjustable rate mortgage, you can begin preparing for your approaching adjustment by taking a few steps now to ensure you're in the best position to refinance when the time comes.

Begin by reviewing your credit report(s) for any discrepancies, such as old trade lines that have been paid-off and are still showing as active accounts. Also note that 30% of your score is predicated on amounts owed on your revolving credit, so start paying down those credit cards and avoid any major purchases in the months leading to your planned refinance.

If you are refinancing, you may want to review your previous loan's closing documents. Do you have a prepayment penalty? If you have an old survey or plat map, this may be of help to your mortgage professional and save you the cost of a new survey.

Check your credit. You can do it by going to www.annualcreditreport.com. Checking your own credit does not affect your score, cost your 'points', or lower your credit score in any way.

Getting ready for a refinance also means getting your bank accounts in order. Most lenders would like to see that you have at least 2 to 3 months worth of mortgage payments in your checking, savings and in some cases retirement accounts to serve as liquid "reserves". The more reserve money you have in the bank, the greater the likelihood of you qualifying for the best mortgage you can get.

Getting your documentation together would also help in doing a smooth transaction. Gather your pay stubs, checking, copy of deed and tax return papers will help to make your transaction close easily.

Research should also be one of your beginning steps in the home loan application process. Becoming well acquainted with your budget, the type and style of desired property if purchasing, and the type of mortgage that will work best for you are a few of the vital things that will put you ahead of the game.

Decide if you will pay the closing costs out of pocket or roll them into your loan. If you can afford it paying your closing costs out of pocket will save you a great deal of money over the life of the loan. If you cannot afford to pay your closing costs ask your mortgage broker about no closing cost loans or financing your closing costs into the mortgage.

Make sure everything is reporting correctly on your credit report. Changes can take up to 30-45 days to take effect, so make sure everything is correct before you apply to refinance.

Give your mortgage broker a call. As your professional debt counselor, your broker should be able to assist you in determining the best way to increase your cash flow and reduce your debt. Your mortgage broker should also be able to provide you with a name of a good asset manager to assist in increasing your overall wealth.

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