Wednesday, January 23, 2008

Home Loan Refinancing - Follow The Steps

Home Loan Refinancing - Follow The Steps by Kate Ross

It is imperative that the borrower takes the trouble to analyze the different possibilities in order to obtain the best deal possible. Otherwise, the whole purpose of refinancing the mortgage will be lost when the costs of the financial transaction exceed the benefits obtained from it.
By following some easy steps you can make sure that your home loan refinancing will provide you with the desired results: a lower monthly payment, lower overall interests and / or a better loan term which implies getting debt-free sooner.

Get Prepared and Clear The Way

If you want to get approved for a refinance home loan with advantageous terms it is important that you get prepared and clear the way towards approval. If you have not done so yet, you need to obtain a copy of your credit report and check the informed credit history for any inconsistencies.

If you find any negative inputs that need to be corrected contact the credit bureaus immediately to have them amended. Remember that you can always get a free copy of your credit report from the credit bureaus at least once a year.

Get prepared in terms of documentation too. You will surely be asked to provide proof of income. If you are employed, you will need copies of wage payment stubs but if you are self employed you will need copies of your tax presentations. There are also other income sources accepted by lenders such as disability benefits, etc. You should check with the lenders which sources are suitable for approval and what kind of documentation is required to show proof of it. When you have all the documents in hand it is easier to bargain with lenders.

Contact Lenders and Financial Institutions

Refinancing is exchanging your current loan for a new one with different terms. Taking into account what you want to achieve, you should contact different lenders and financial institutions and request loan quotes from them. Remember to check the interest rate charged and other loan terms carefully and beware of hidden fees and charges.

Try to obtain quotes without having your credit report pulled because this can lower your credit, provide a copy of your report yourself and tell the lenders to provide an informal quote taking into account that information. If you decide to finally apply with a particular lender then you will have to authorize them to pull your report but it is always better to get as many quotes as possible to compare without damaging your credit.

Also, remember that there are many types mortages loans to choose from and you should be well informed before making a decision. If you need to lower your payments you can obtain an interest only mortgage loan or a balloon mortgage loan by refinancing.

If you need extra cash you can get a cash-out refinance loan which will provide you with extra funds using the available equity on your home and so on. There are many options to choose from and surely one of them will suit your needs

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