Mortgage Advice

Refinancing Tips That Will Help You Reach Your 2013 Financial Goals

January 18, 2013

It’s a new year, and while many of you have probably resolved to get in shape, stay organized or be more productive, now is also a great time to think about getting financially fit. In addition to resolving to spend less and save more, you might also consider refinancing your current mortgage loan. Whether you want to lower your interest rate and monthly payment, change the term of your loan or tap into your home equity, historic low interest rates provide many great refinance opportunities for current homeowners. The following refinancing tips will set you up for a smooth and successful mortgage refinance.

Before you begin shopping for rates or searching for programs, you need to answer two critical questions in order to determine what options are available:

What type of mortgage do you currently have? Before exploring refinancing options, you need to determine if you have a Fannie Mae or Freddie Mac conventional loan, FHA, Rural Development or VA loan. If you have a conventional mortgage, there are two websites that can confirm if it’s with Fannie Mae or Freddie Mac. If you do not have a conventional loan, you should call your current lender and ask them what type of loan you have.

What is your current home value? This is the big question homeowners must answer when trying to refinance. Based on the current market, it’s likely that a lender will perform some research before ordering an appraisal of the property. If an appraisal is needed, be sure to have a list of completed home improvement and remodeling projects ready to show the appraiser. Taking this extra step to prove your home’s value will help ensure the appraiser values your home knowledgeably and accurately.

After you’ve answered these two important questions, begin organizing the paperwork you’ll need to complete a refinance application. A typical refinance application requires a variety of documents including a month’s worth of pay stubs, your two most recent bank statements and two years worth of tax returns including W-2s.

Once a lender has this information, they can determine what loan programs are available that help you achieve your financial goals. There are also programs such as the Home Affordable Refinance Program (HARP) loan, available for homeowners who possess little to no equity in their home; many lenders even offer low or no-closing costs options for refinancing.

One last important piece of advice: Not all lenders offer all of the programs that are available. In the event you’ve been told “no” by a lender, it’s never a bad idea to get a second opinion to see if there are other options available.

If you are interested in refinancing your current mortgage loan or have questions regarding what programs you’re eligible for, visit our Refinance FAQ page or call me at 810.494.7141.

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