Mortgage refinancing loans may be what you need in order to lower your interest rates, reduce your monthly payments and save a ton of money. The lending rules have changed, though and even though you might be thinking that you’re a shoe-in for a mortgage refinance, if you aren’t prepared, you might find that you don’t wind up with nearly what you were hoping for.
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How Is Your Credit?
Lots of people are finding that when applying for mortgage refinancing loans, they have to have better credit than they really have. This is causing problems all across the board, but you can offset the issue of getting a new loan by making sure that you have top notch credit. Make sure to plan well ahead and pay all of your bills on time. Don’t miss any payments and try to make sure that you don’t carry a balance of more than 30% of your available credit. It’s a good idea to aim for about 23%. This shows lenders that you have a healthy balance of credit and can handle payments on your new loan.
How Much Equity Do You Have In Your Home?
You must make sure that you have some equity in your home. This is essential because your home has likely lost value over the last few years. This means that you’re going to have to prove that you’re not upside down on your current mortgage. If you’re planning ahead, try to make extra principal payments for about a year to increase the equity you have in your home. This will help to reduce the chances that you’re underwater on your home and increase your chances of getting a mortgage refinancing loan.
Money Down When You Refinance Your Mortgage
This is another tricky part, and one that might be tough, but many people are choosing to come up with some serious cash when they apply for mortgage refinancing loans. This is helping them to further reduce their monthly payments. If you can come up with cash, you’ll find that you have an easier time getting your loan and paying it off. Plus, you’re likely to reduce your interest rates when you have the extra money to put down on your new mortgage loan.
If people tell you that mortgage refinancing loans are tough, they’re right, but if you know the steps to take before you get started, you’ll find that you can refinance your mortgage and get the payments that you’ve been hoping for.
So, before you choose to consider a mortgage refinancing loan, you should take some steps to be sure that you get your loan the first time around.