How do I Refinance a Homeowner's Mortgage?
- 1). Pull your credit report at Annual Credit Report, the federally mandated consumer site. All U.S. citizens can get free copies of their reports at this website. Pay for your FICO score, too. This is a three-digit number between 300 and 850. This number shows lenders your total creditworthiness. Scores over 700 are great; scores below 600 are poor.
- 2). Review your current mortgage documents to determine the pros and cons of the current deal. For example, you may want to refinance out of your mortgage to get away from a variable rate, but you may like how your current lender escrows your taxes and insurance (includes these into the mortgage payment for convenience's sake). Make a list of positives and negatives and structure your refinance search around these.
- 3). Find several potential lenders. Use your credit rating to guide this search. If you have an excellent FICO, you should stick to local banks, credit unions and some mortgage brokers. If you have less-than-perfect credit, you may need to use a finance company--such as Wells Fargo Financial or CitiFinancial.
- 4). Fill out refinance applications with all potential lenders. Provide all loan officers with your existing mortgage paperwork, your income documents and a property tax bill. This will not only expedite the preapproval process, it will ensure accurate and fair offers from all lenders.
- 5). Review the loan offers. Compare them against your current mortgage and against your list of pros and cons. The goal is to find the refinance deal that best meets your mortgage needs and your long-term financial goals (i.e., saving more money, getting out of debt sooner).
- 6). Choose the refinance that best fits this bill. Turn down all other pending applications. Follow the approval of your refinance carefully. After a mortgage application goes through the underwriting process, fees, rates and terms can sometimes change. Sit down with your lender before signing the approval paperwork to ensure the refinance is still a viable deal.
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