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Mortgage Refinancing Tips

With the market bearing record low mortgage rates, there is a good chance a refinance mortgage will help you uncover some financial savings that will also increase your cash flow.  Like anything, before jumping in with two feet, consider the risk vs. reward and the cost vs. benefit.  If you currently have an adjustable rate mortgage or a negative amortization home loan, likely there are more benefits. 

Watch Mortgage Refinancing Video

Make sure when shopping mortgage refinance rates that you follow the 7 steps outlined below.

1.    Get a copy of your credit score so you have a solid understanding of what your qualifications are as a borrower.  

2.    Verify the loan officer quoting you an interest rate has run your loan application through DU (direct underwriter) which is an automated underwriting engine that most lending companies use for pre-qualifications and pre approvals for conforming and FHA home loans. This automated lending system analyzes your credit report and 1003 loan application data in an effort to secure a match between your qualifications and the lending bank’s criteria. 

3.    Don’t B.S. your income.  For the most part, stated income mortgage loans have vanished, unless you have the ability to provide alternative income documentation, like bank statements or statements that prove a significant amount of liquid assets available. 

4.    Make sure you are “comparing apples to apples” when considering multiple mortgage loan offers from competing lenders. 

5.    Always request loan disclosures that include the Good Faith Estimate (GFE) and Federal Truth in Lending (TIL)

6.    Verify the mortgage lenders you are talking with are approved for originating FHA mortgage loans.  FHA has many new refinancing programs that offer expanded opportunities for homeowners with credit issues and lack of home equity.  HUD still offers FHA cash out refinancing to 95% and the FHA mortgage rates are extremely low.  If you are simply refinancing your first and second mortgage with no need for getting cash back, you can refinance to 96.5%.  If you already have a FHA loan and want a rate and term refinance, request a FHA Streamline loan.  These are low rate quick closing mortgages, but you must currently have a FHA mortgage to qualify for streamline refinancing.

7.    Don’t waste your time getting quotes from inexperienced loan officers or unprofessional mortgage brokers.  Only work with lending professionals that make your loan approval a priority, but also have the experience to help you qualify for the lowest possible interest rate while making the refinance process painless for you.

This mortgage loan article was written and published by Bryan Dornan.

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