Reducing your current interest rate even just a point or two or converting from a 30-year mortgage to a 15-year loan could help save you more money. However, before shopping around for a mortgage refinance, you first need to make your application as best as it could be. This would make your application more appealing to potential lenders and increase the odds that you’ll get your refinance approved. Below are some tips to prepare for your refinance.
1. Check Your Credit
Prospective lenders want to make sure that you have sufficient income for paying off your monthly when you refinance. However, they’ll likewise take your credit score into careful consideration. Federal law states that you could look at your credit history for free once yearly, but you do need to pay a fee to see your actual credit score.
2. Obtain All Necessary Documents
Basic documents include proof of your income in the form pay stubs, for at least a couple of pay periods, as well as copies of your tax returns from the previous two years. You’ll likewise have to collate recent statements of your investment and personal banking accounts. Prospective lenders would likewise look into your spending history, particularly from the last two years, so refrain from making large deposits or withdrawals a couple of months before applying for a refinance.
3. Figure Out The Value of Your House
Lenders require all sorts of details to determine your eligibility, what loan amount to approve you for, and your interest rate, says a mortgage refinance specialist in Salt Lake City. This includes the value of your home. If the home appraisal comes up with a less than desirable value, you might not be qualified for a refinance so you need to figure out your home’s worth before you even apply for refinancing.
4. Last, But Not The Least—Shop Around for Lenders
If you’re okay with your current lender, then inquire about your chances of refinancing with them first, and since they’d probably want to keep you, they might offer you a reasonable interest rate. But keep in mind that it’s not all about a low-interest rate since you’ll also have to pay related fees, so do your due diligence, and just as it is with other loans, compare interest rates and fees from different lenders to help you find the refinance deal that you could comfortably afford.