Refinance Home Mortgage Guide

If you’re considering refinancing your mortgage and have less than perfect credit, there are steps you need to take before applying to improve your credit. Mortgage approvals are becoming more difficult these days even for homeowners with good credit. If you are going to have your application for refinancing approved you will need to improve your finances not only to get approval, but to qualify for the lowest possible mortgage rate. Here are several tips to help you refinance with bad credit.

Check Your Credit History First

The first thing you’ll need to do before contacting a mortgage broker is to request copies of your three credit reports and carefully check for errors. Your credit records are maintained by three separate companies that do not always share information. These three credit agencies are Equifax, Experian, and Trans Union. You don’t have to pay for these reports as Congress passed a law requiring each of them to provide you with one free copy of your credit history every 12 months. You can request these free credit reports by visiting the website annualcreditreport.com.

Dispute Inaccurate Information

If you find mistakes in your credit history you’ll need to dispute the error and allow enough time for the correction to be reflected in your credit score. It is not uncommon to have mistakes with one credit agency that are not reflected in the other credit agencies. Mistakes are common so it is very important to review your credit reports every year and follow that credit agency’s procedure for disputing inaccurate information as quickly as possible.

Pay Your Bills on Time

Late payments kill your credit score. Always make your payments on time, especially your mortgage payment. When paying your credit cards make sure you pay at least 20% more than the minimum payment that is due in a given month. Pay your credit cards down to at least 50% of the available balance. You can shuffle balances around between cards that have balances less than 50% if you don’t have the cash on hand to pay your cards down.

Work With a Mortgage Broker

Mortgage brokers have access to programs that you might not be able to find on your own. A good mortgage broker can help you not only improve your credit but can often work around your financial shortcomings to get your loan approved. You have to be careful when choosing the right person as brokers work for a commission and the loans that bring them the largest commissions are not necessarily the best loan for your situation. You can learn more about finding the right person to originate your mortgage without paying too much by registering for my free mortgage video tutorial.

It is becoming increasingly more difficult to get approved for a mortgage loan even with good credit. Mortgage lenders have been tightening standards for approval due to the credit crunch of late…and the end of the crisis is not yet in sight. Here are several tips to help make sure you qualify if you’re in the market to refinance your home mortgage loan in today’s topsy-turvy mortgage market.

What Mortgage Lenders Consider

Mortgages lenders look at a number of factors to not only approve your loan but assign you a mortgage rate. The top aspects lenders look at are your past credit history and the amount of cash you have; however, the single most important factor is your credit worthiness. If your credit score is below 700 right now your only option could be one of the FHA programs. While FHA loans are great the downside for you is that you will be required to purchase Private Mortgage Insurance (PMI). If you’re not familiar with PMI, this insurance protects the lender and the government from losses if you default on the loan.

The amount you’ll pay for PMI premiums depends on your credit history and can add hundreds of dollars to your monthly payment. While this is certainly a downside of Private Mortgage Insurance, if paying the premiums allows you to keep your home it’s certainly worthwhile.

How to Improve Your Credit Rating

To build a strong credit score you can start by paying down the balances of your credit cards so that you have not used more than half of your available credit. Suppose for example that you have a $5,000 limit on your cards…it is best not to exceed $2,500 in available credit. If you have used more than 50% of your available credit shifting the balances to other cards with less than half of the available credit used could improve your credit rating.

Pay More Than The Minimum Payment

Making the minimum payment every month will not help your financial situation. Set your own payment at least 25% higher than what you are due each month. This will not only improve your credit score but help pay down your balances as paying the card minimum will never get you anywhere. Don’t pay off your balances entirely…you want to show that you can use credit responsibly.

You can learn more about qualifying for a better mortgage and improving your credit score by registering for my free video tutorial.

Refinancing your mortgage loan with the wrong broker will cost you thousands of dollars and in today’s economy could even result in the loss of your home.

Remember that mortgage brokers are salespeople and come in multiple shapes in sizes with their own personalities. How can you tell if your mortgage broker is a dud? Here are several tips to help you find the right person to refinance your home mortgage.

Beware Endless Chatter

Like any other salesperson the mortgage broker that talks but never listens to you is the wrong person for the job. Dishonest mortgage brokers use never ending banter to distract you from something they may be hiding in your loan contract. Trust your instincts…if your mortgage broker comes across as a sleazy sales type that talks your ear of endlessly without letting you get a word in you should probably find another broker.

Sloppy With Paperwork & Deadlines

Being punctual is essential when it comes to your mortgage loan. If your mortgage broker is sloppy with paperwork it could cost you money. If your mortgage broker tells they will call you at a certain time and does not keep their appointments consider this a bad sign and move on to another mortgage broker.

Inexperience Costs You

When shopping for a mortgage broker it’s always a good idea only to work with those who have ten years of experience or more. If your broker has to consult the underwriter or someone else in the office before responding to your questions consider it a lack of experience and move on. Don’t worry about hurting anyone’s feelings…you’re not looking to make friends, you want a better mortgage right?

Good Mortgage Brokers Aren’t Hard to Find

The ideal mortgage broker is one that has a minimum of ten years experience, is self employed, and does not employ a sales staff. Finding a mortgage broker that fits this profile working from home is even better. Why? Mortgage brokers with fancy offices and sales staffs have to pay for their plush offices and the salaries of their sales staff.

This means they are going to be much less likely to negotiate fees and things like Yield Spread Premium on your loan. Remember, you’re paying for that fancy office and the hummer parked outside. You can learn more about refinancing your mortgage without paying too much today by registering for our free video tutorial.

Home equity loans are becoming a popular means of borrowing against the value of your home. There are actually two types of equity loans available called the “open end” and the “closed end” loans. An equity loan is one in which you take the equity in your home and use it for collateral so you can receive a loan.

Before you can qualify for a home equity loan you will most likely be required to have very good or excellent credit. If you meet these qualifications, this is how a home equity loan works.

When you apply for the loan there is a process that you must follow. You will start by filling out an application form. The loan representative will ask you to verify the information on your application and they will ask for any additional information that is needed. At this time they will also provide you with vital information such as the terms of the loan and the interest rates.

The details that you provided to the loan representative will be confirmed and then you will need to download an authorization form that will start the loan approval process. You will need to sign the application and fax it back.

The documents that you will need to provide to receive a home equity loan are listed below:

• W-2 Forms
• Proof of Income
• Proof of Homeowners Insurance
• Financial Analysis Worksheet
• Mortgage Statements
• Appraisal Forms for the Equity
• Bank Statements

Have this information ready when you first apply for the loan and it will save you a lot of time. Once all the information has been submitted it will be processed and then you will be asked to schedule a document signing. Make sure you understand everything in the documents before you sign so you don’t end up with any surprises later. The documents will be verified and validated and then sent on to the funding department. At this point the check will be issued and the loan is complete.

A home equity loan is a great way to receive the extra money you need to pay for any unexpected expenses that come along. It can be used for remodeling your home, medical bills, school expenses and so forth.