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How to Refinance: Preparing the Paperwork
by Sheryl Landrum
CMR Columnist
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If you're wondering how to best prepare to refinance your home mortgage, follow these key steps. This way, you'll not only make the process an easy one, but you might also qualify for the best interest rates.
- Credit alert! Good credit is the biggest determiner of whether or not you can qualify for a home loan at a good interest rate. Have your loan officer run your credit report and take care of any issues that need to be dealt with before refinancing your mortgage. Do not run up any new credit debt, and reduce your credit balances as much as you can. Credit balances below 50% of your available credit will help raise your credit scores. Do not close out existing credit accounts and always pay your bills on time.
- Keep track of your paperwork. This is a simple, but often overlooked step when people are preparing to refinance their home loans. Most home loan programs will require two months' worth of bank statements (all pages), a month of consecutive pay stubs, two years of W-2s, a copy of your driver's license, a copy of your homeowner insurance declaration page, and a copy of your current mortgage statement(s). Don't hold up your refinance by not having the necessary documentation.
- Fatten those asset accounts. Lenders want to see three to six months' liquid reserves in your bank accounts. When preparing to refinance your home loan, stop spending and start saving.
Your ability to qualify for a new home loan and a good interest rate will benefit from these simple steps.
About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding, Inc. in Carlsbad, California and a freelance writer specializing in mortgage issues
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