Top 4 Tips for Refinancing your Home
1. Check your credit rating. Before you do anything, make sure you check your credit rating. Refinancing, like any mortgage these days, can take a lot of work and a lot of time - spare yourself the pain of a rejection by checking your credit scores before submitting your refinance application. A low credit rating can affect the interest rate, as well as the availability, of any refinancing. (Financial Planning Association)
- Check your free credit report for errors: If you find mistakes such as incorrectly spelled surnames, wrong street addresses or inaccuracies in your job history, write a letter to the credit bureaus and ask them to fix the errors.
- Pay down high balances: Paying off some debt can help burnish your credit credentials.
- Opt out of pre-screened credit card offers: Opting out of credit card offers also prevents phone or e-mail harassment from other mortgage-loan and refinance companies. (Bankrate.com)
2. Do you have more than 20% equity in your home? Considering price drops around the country, how much equity do you really have? It's going to be hard to refinance at the best rates if you're below that 20% number. Do a bit of research before you pay for an appraisal on the refinance. Tools like Zillow.com and Trulia.com can give you an estimate of the value of your home, or a trusted real estate agent can give you a ballpark figure. Also don't extend your mortgage to save money. Although banks advertise rates on 30 and 15 year mortgages, chances are they'll issue you an odd-year mortgage (for example, a 27 year mortgage, if you've been in your current mortgage for 3 years). It's worth asking. Do whatever you can to not extend the number of years you'll be paying. If your bank won't do this and you'd still like to refinance, take the lower payment. (http://www.upperlinefinancial.com/2011/07/refinancing/)
3. Have a good idea what your home is really worth. A drop in your property's value may prevent you from being able to refinance. So do a little research and find out what properties, similar to your own, have been selling for in your neighborhood. If those amounts indicate that you may have little or no equity left in your property, you may be unable to refinance without putting additional funds down, even if you would otherwise meet a lender's mortgage qualifications. (Financial Planning Association)
- The more equity you have, the better your interest rate: Eventually you will need an official estimate of the value of your house, but having a general sense ahead of time can help you with your shopping.
- Check out the open houses in your neighborhood: Take a look at the real estate section of the newspaper so you get a ballpark estimate of what your house is worth. (Career and Money)
4. You are not obligated to stick with your original lender, check out the competition to compare local and national refinance rates. You can do this on bankrate.com and use a mortgage refinance calculator to calculate the optimal choice. Rates are at historical lows, but the gap between the best and worst deals can be as much as a full percentage point, according to HSH.com. You should also check with lenders in your area, and ask friends and relatives where they got their mortgages and whether they'd recommend their lender. (SmartMoney.com and Msn.com)
Contact Information for Mortgage Companies
-Bank of America Mortgage Department: 1-800-987-8394
-Wells Fargo Mortgage Department: 866-416-6134.
Suntrust Mortgage Department: 800-634-7928
CHASE Mortgage Department: 1-800-848-9136
USAA Home Loans & Refinancing (Active Military, Veterans and Military families only): 1-800-531-0463
Associated Credit Union: (770) 448-8200
Navy Federal Credit Union: 1-888-842-6328
Fannie Mae: (404) 398-6000