While refinancing your mortgage can be a great tool for lowering your payments and gaining control over your mortgage payments, the process is quite tedious. There are numerous requirements and eligibility criteria you will have to face in order to successfully obtain a refinanced mortgage. Before going into the process it is best to prepare yourself what lies ahead.
Preparation Is Key
Refinancing isn’t something that should be considered lightly. There are often costs associated with the process that could take a financial toll if you aren’t prepared. Make sure that you have the out of pocket funds to cover the closing and appraisal costs of refinancing, which typically run around 3% of the total amount of the new loan.
Your credit is extremely important to the qualification process, but many people fail to review their credit standing before applying. If you have had trouble with mortgage debt, a foreclosure or bankruptcy in the past is will be crucial that you have some additional financial documentation to prove your not a borrowing risk when applying for a refinancing loan.
The overall amount of debt you carry is also vital when determining your eligibility for the new loan. If your total debt-to-income ratio is too high you may find that you do not qualify for, or only receive approval for a higher interest rate on, a loan. You should evaluate your debt burden and be sure to take the time to pay down or eliminate some of your debt before considering a refinancing offer.