Take these steps, Before you refinance mortgage loans

With mortgage rates at their lowest, May you be thinking of refinancing your mortgage. What must you do to prepare to refinance your mortgage? 

It is important to know the current value of your home, your existing mortgage interest rates and your credit history and score. You must also run the numbers to see if you can recover your closing costs within a reasonable time. And, unlike during the housing bubble, you now need to provide lots of documentation, including proof of your income when you want to refinance your mortgage .. 
Before you refinance your mortgage, there are eight things you need to do: 
Check the interest rate you have on your loan. When interest rates dip, the natural inclination is to start filling in loan applications left and right. But too often, owners are focused solely on the new interest rate instead of how they will save a lot of refinancing. If you look for fresh water May-bragging rights, you should only refinance if it will save you money. 

Find out what your home is worth. There is no way to sugarcoat it: Home values have fallen into the country an average of about 20 per cent during the year. In some places, like Las Vegas, Miami, Phoenix and greater San Francisco area, the decline was twice as steep. It is essential to assess whether your home has any equity (the difference between what you owe and what the house is worth) or, if you are "under water" with your mortgage (which means that you owe your lender more than the property is worth). Whether you have equity will determine what type of refinance is open to you. 

If you're on your mortgage, sub-evaluate how you are. Although federal requirements have changed with respect to the property or refinancing loans insured by Fannie Mae, Freddie Mac, or FHA, if your loan is more than 105 percent of the value of the property, you do in May not be able to refinance without putting money to the table. (You May be eligible for a loan modification, however.). 

Obtain a copy of your credit history and credit score. Since the beginning of the credit crisis, lenders have increased the required credit scores to get approved for better loan programs and better interest rates. The best place to make a copy of your credit history and your credit score is AnnualCreditReport.com. This is the only place where the three credit reporting bureaus to provide a free copy of your credit history each year, the more you can pay $ 7.95 for a copy of your credit score. Choose the Equifax credit rating, because it is closest to the score used by most lenders. (You can also go to MyFico.com, and the purchase of your credit history and FICO score for $ 15.95. You May Also their online community to be useful in terms of proposals on how to raise your score credit.). 

Begin to identify potential donors. Shopping around for a loan takes a little more planning and effort that, as donors have looted the costs they charge to secure the loan and the process. Your best bet is to speak to a national lender, a credit union (if you belong to one or can join one), a mortgage broker (call your real estate agent if you do not know and take some number of recommendations), and perhaps a line of credit. 

Find out if your second lender subject to your lender first. If you have a first and second mortgage (also known as home equity loan), whether the second lender subject to the new lender first. This will allow you to refinance your first mortgage while leaving the second loan. Seconds Many lenders will not agree to this, and if yours does not, May you not be able to refinance at all unless you pay the second loan. One option is to refinance your first mortgage with the lender that holds your second loan. 

Focus on the big picture, not just the interest rate. Although the interest rate you get is important, it is also important to calculate how much you pay in fees, and how long it will take to pay for the return of the refinance with your monthly savings. For example, if you will save $ 50 per month, and it costs you $ 5,000 to refinance, you will be 100 months, or more than 8 years to pay the costs of borrowing. You do not start saving until the eighth year of repayment of the mortgage. So, unless you cut the length of the mortgage significantly (from 30 years to a 15-year), or you can pay the charge in a relatively short period of time (eg less one year or 18 months), in May, it will not pay to refinance. 

Get your documents together in advance. Before the housing crisis, we can almost do a refinance on the phone. In fact, you can call the loan officer you worked with regularly and put in your order for a refinance. You could do it at no cost refinance without providing much proof of income or account statements or copies of tax returns. The forms will be sent to your home, you can sign and send in. Now, you must have your documents so you can refinance. Bring your W2, a pay check current copy of your last two federal and state tax returns, a copy of your bank accounts, retirement accounts and other assets. Then call the lender. (source)