Mortgage rates have stayed surprisingly low over the past 12 months. Many in the mortgage industry are advising clients to strike now and refinance their homes while rates are still near the record lows experienced in 2012.
In order to help guide you through the process, we’ve pulled together four tips for your home refinancing success:
1. Prepare your credit profile
Although it’s always advisable that you stay on top of your credit profile, it’s even more important during the months leading up to your home purchase or home refinance.
In order to best position yourself for the home refinance process, avoid changing your credit obligations and standings. Don’t open large charge accounts, make major purchases such as a car, or fall behind on your payment obligations.
Additionally, you should refrain from moving money between accounts, including money from savings into a certificate of deposit or funds from an IRA into any other form of savings or investment account.
Just as you did before you purchased your home, you want to enter the mortgage refinance process with a solid, stable credit profile.
2. Get preapproval for your home loan
Taking the time to obtain a preapproval before you begin the official home loan refinance process will make things move more quickly.
Similar to what happened when you obtained a preapproval for your initial home loan, your mortgage broker will pull your credit report and submit the high-level information to underwriting. This initial snapshot of where your credit score, obligations and ability to repay reside currently will allow your lender to give you the go-ahead you need to begin the mortgage loan refinance process and ensure you move through quickly and virtually painlessly.
3. Organize yourself for success
After you’ve obtained your preapproval, the next step is to get your documentation in order. For the 2 months leading up to your refinance, try and keep copies of all the financial paperwork you can, including bank statements, investment account updates, tax returns and W-2 information, mortgage property tax statements and paystubs.
Also, should you have anything on your credit report that seems off or could cause a lender to ask questions, take time now to complete the necessary research and document your findings in a letter. You’ll be able to submit these letters to your lender when you officially begin the refinance process.
Having all this information pulled together will save you time when you need to provide it to your mortgage banker later.
4. Calculate your refinance target number
Now that you’re preapproved and you have your paperwork and documentation ready, take some time to figure out your ideal refinance rate. Use an online mortgage calculator to determine what it will take to get you to your end goal.
When you sit down with your mortgage broker, share both your ideal rate and end goals with them so he/she can have a clear understanding of your overall picture and help guide you to success.
The most important tip for success is to do your homework and be prepared before entering into the mortgage refinance process. When you’re ready to take those first steps, contact the mortgage professionals at Guardian Mortgage and let us help guide you through the entire process.