2 St ep Tw o: Learn Your Current Credit Score Once you decide that market conditions make refinancing attractive, you should check your credit score Do this even before you start talking to specific lenders, because if there are issues with your score that need to be addressed, you will need some time to take care of that. Your credit score can impact refinancing in a few ways. A low credit score can prevent you from being approved for a new loan. Even if your score is not so low as to get you turned down, having relatively weak credit can increase the cost of refinancing by causing you to have to pay mortgage insurance, or by prompting lenders to charge you a higher interest rate. 3 St ep Three: Research Your Hom e?s Current Value A big factor in refinancing is how much equity you have in your home. Equity is the difference between the current value of the property and how much you still owe on your mortgage. The bigger the equity cushion, the better your refinancing options are likely to be. If you have 20 percent or more of the home?s value in equity, you should be in excellent shape for refinancing. If you have a bit less equity than that, you may find refinancing more expensive. If you have little or no equity, you are likely to find your refinancing options extremely limited. Since real estate values change all the time, you need to make an up-to-date estimate of your home?s value. Check out real estate websites for estimates of your property?s market value and also look at the recent sale prices of comparable properties nearby.
4 St ep four: Program Choice Most refinancing goals can be met with more than one program, and a knowledgeable loan professional can help borrowers winnow out the most appropriate program for their needs. For example, homeowners desiring smaller payments can achieve them by finding a lower interest rate, stretching out their remaining balance over a longer term or choosing an interest-only loan. The loan officer should assess the borrower?s risk aversion, expected tenure in the home, and plans like retirement or starting a family. 5 St ep Five: Know Fees and Addit ional Cost s While mortgage rate comparisons tend to be the focal point of shopping for a refinance loan, it is important to take a careful look at other fees and costs. These can represent a significant amount of money, and might even make the difference in determining whether or not refinancing is cost-effective. These comparisons are complicated by the fact that lenders have a variety of ways of distributing the cost of refinancing between interest rates and fees. Get a complete, written list of projected costs from your lender before committing. Some of the things you should be looking for include fees for things like the application, appraisal and inspection, loan initiation points, mortgage insurance premiums, and various legal and administrative fees. You should also check your existing mortgage to see if refinancing would trigger any sort of prepayment penalty. 6 St ep Six: Refinance Applicat ion Fill out your Free pre-approval application here http://www.capitamtg.com/free-mortgage-quote.html