Tips for
refinancing your house
Typically it takes
3 to 4 weeks to complete a refinance of your home. The
process is fairly simple to understand. You start with the
application followed by a good faith estimate, an appraisal,
underwriting, approval, signing of loan documents and closing.
CREDIT REPORTS FOR REFINANCING
Before you apply
for a home loan you should do a little homework. You should know
the following: current interest rates, your fico score, the value
of your property. You can look up current interest rates in
the weekend edition of your local newspaper or online. Your fico
scores can be obtained for free. The federal government mandates
the three major credit reporting agencies give you 1 free credit report
per year. You will need to find out your mid fico score because
when your home loan is underwritten the lender will throw out your
lowest and highest score and qualify you using your mid fico
score. Check with annualcreditreport.com
to receive your free credit report.
HOME VALUES
You should aldo
have an understanding or your home's value. An easy way to check
your home value is to go to zillow.com - simply input your
address and you will see the recent sales in your area as well as your
home value. You may need to modify your request if you have
additions or additional features such as a new pool, new a/c unit
etc. This will give you a rough idea of your home's
value. Don't make the mistake of thinking a listed home's price
in your neighborhood is your home value. House value is determined by
recent sales of comparable homes in your area.
YOUR INCOME
Your income will be
an important factor in determining your rate and term on your new home
loan. Take your last years W-2 or 1099 earnings off your tax
return and divide it by 12. This will give you gross monthly
earnings. It is the gross monthly earnings the lender will use to
qualify your new loan. To qualify for the best loan your total of
monthly expenses should not go above 50%. In other words if your
combined gross monthly income is $6000 per month your total of payments
including mortgage, taxes and insurance and any other outstanding bills
should not exceed more than $3000 otherwise your debt to income ratio
will not qualify you for what is called a "full documentation" home
loan. You may have to qualify as "stated income" and this will
cause a higher interest rate. Obviously if you
can't prove your income you would definitely have to qualify as "stated
income". You can still qualify for very good loan going "stated"
depending on some factors.
REFINANCE TIP:
The optimum way to
qualify for the best home loan is when your fico score is excellent
(700+), you have plenty of equity and your can prove your income at
less than 50% debt to income ratio. If you have had credit
challenges, are thin on equity or if you can't quite prove your income
you should seek the advice of a professional mortgage broker.
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