Tips For Refinancing Home Mortgage Loans
There are many good reasons for refinancing a home mortgage loan
, especially in troubled economic times. Over the past several years, many people took advantage of easy-to-get adjustable rate mortgages often called ARMs, counting on the promise that real estate always increases in value. Unfortunately, the recent economic downturn proved that belief wrong. Many homeowners who signed on for hybrid home mortgage loans expecting to be able to refinance into more favorable terms in a few years are finding that its not as easy to refinance their mortgages as theyd hoped. There are, however, some things you can do to make it easier to find a home mortgage loan refinance.
1.Get your credit report and clean it up if necessary.
Your credit score will be one of the biggest factors in determining whether you can get your mortgage refinanced, as well as the interest rate that youll be offered for your new home mortgage. If you havent checked it within the past few months, take the time to request a copy of your credit report from the three credit reporting agencies. Remember that youre entitled to one free credit report per year from each of the three main credit reporting agencies. If its been a year or more since you ordered a free credit report, you can get your report for free.
Check your credit reports over carefully for any errors they may contain. If you find that they still list an account that youve paid off, for instance, contact the credit reporting agency to have them make a correction. Some of the other errors you may encounter include:
-listing closed accounts as open
-listing disputed amounts on credit card statements as late or unpaid
-not including credit accounts that are in good standing
-inaccurate reporting of payment arrangements made with creditors
If your credit report contains any of these errors, contact the reporting agency immediately to have it corrected so that your credit reports reflect your situation as accurately and positively as possible.
2.Improve your credit score.
In addition to correcting your credit reports, there are also some steps you can take to improve your credit score. A credit counselor can offer you detailed steps to take that apply to your specific situation, but in general, the following can help improve your credit score:
-Pay down any credit card accounts that are at or near the credit limit. This will improve your ratio of available credit to debt, which will raise your credit score.
-If you have more than 3-5 credit cards without outstanding balances, consider closing one or more to decrease the number of creditors. Be care of how you do this, though for instance, closing out a credit card account with a high credit limit and a low balance could actually hurt your credit rating.
-Dont close your oldest credit accounts. One of the factors that affects your credit score is how long youve been handling credit responsibly. Your older accounts will affect your score positively.
3.Shop around for mortgage refinance loans.
Ignore the come-hither emails and telephone calls offering you great rates to refinance your current home mortgage. Instead, do your own research to find the best local and online lenders. You can often request multiple quotes from several different lenders at online mortgage web sites. Try to get at least three mortgage quotes from three different lenders. That will give you a basis for comparison.
4.Sit down with a loan officer from a reputable company to discuss your loan options.
While its not as easy to refinance a mortgage as it was a couple of years ago, there are still many mortgage and refinancing options available through various lenders. Reputable lenders are interested in making sure that youre offered a loan that fits your circumstances and your needs, so be honest in what you hope to accomplish by refinancing.
5.Be sure that youre comparing like loans when you compare.
Comparing loans against each other is an important part of choosing the best mortgage refinance. In order to decide which is the best deal, its important to know that you are comparing similar loans. Make sure that when you compare loans against each other, you are comparing loans with the same number of payments and amounts borrowed.
When you find a mortgage refinance loan that seems appropriate, be sure that you read through all the terms and conditions carefully to avoid any surprises in the future. If you have trouble understanding the language in your loan contract, ask someone more knowledgeable to read it and explain each clause to you so that you understand exactly what you are agreeing to pay, when it must be paid, and what penalties you may face for late payments, missed payments or early payments.
Remember, a refinanced mortgage is as binding as your original mortgage. If you dont make the payments to which you agree, you risk losing your home. Take the time to shop for your best deal on an affordable home mortgage refinance, and be sure that you understand exactly what you are agreeing to pay.
by: Cynthia_Andrews
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