Top 10 tips for finding a home loan refinance
Filed under: 101 mortgages
Finding it hard to resist mortgage interest rates below 5%? You're not alone if you want a home loan refinance. Here are the top 10 tips to making sure your home loan refinance experience goes smoothly.Home Loan Refinance Tip #1: Figure out how much equity you have. Get your property's value assessed and find out from your Realtor what the comps in your area are selling for as opposed to what they're listed for. Does your neighborhood have a lot of foreclosures? If so, expect your home value to have dropped in price, which can affect your home loan refinance. Most lenders today won't do a home loan refinance unless you have at least 20% equity and have proof of income.
Home Loan Refinance Tip #2: Make sure your credit score and income qualifies you. Because of the housing crisis fallout, lenders have stricter credit and income requirements. Get your credit and debt-to-income ratio in order before even beginning to think about entering the home loan refinance process.
Home Loan Refinance Tip #3: Prioritize your home loan refinance goals. Whether you want to lower your monthly payments or reduce your loan term, figure that out first to make sure you meet those goals with your home loan refinance.
Home Loan Refinance Tip #4: Don't assume you can't get a home loan refinance if you are under water with your mortgage. Even if your property's value is less than what you owe on it, it is still possible to get a home loan refinance. If you have a mortgage that is owned or securitized by Fannie Mae or Freddie Mac, you might still be able to qualify. Some federal programs even allow you to get a home loan refinance if your mortgage is 125% of your home's value.
Home Loan Refinance Tip #5: Don't assume you can't get a home loan refinance if you are unemployed. Many are finding themselves in the position where they can't qualify for a home loan refinance because they don't have a full-time job, but because they don't have a full-time job, they need a home loan refinance. If you can relate, no documentation loans are one option. WalletPop has written about how to manage the home loan refinance question as an unemployed person here.
Home Loan Refinance Tip #6: Don't take the first home loan refinance you see. Shop for the best home loan refinance deal, since home loan refinance fees vary widely. Shop around for lenders, asking what home loan refinance fees and rates each offers.
Home Loan Refinance Tip #7: Check out your credit union for a home loan refinance. Nonprofit credit unions often charge lower interest rates and fees than traditional banks.
Home Loan Refinance Tip #8: Find out whether your existing mortgage involves a prepayment penalty if you get a home loan refinance. If you do have to pay fees that equal the amount you'd save from a home loan refinance, then obviously, it doesn't make sense to proceed.
Home Loan Refinance Tip #9: Be careful about getting a home loan refinance to pay off debts or to make purchases. We've all seen the aftermath of the home-loan-refinance-as-ATM mentality, so think twice about whether your motivations for getting a home loan refinance are reasonable. You don't want to use a home loan refinance to consolidate debts so you can afford your dream vacation or dream car, but you can, with caution, make an argument for using a home loan refinance to make home improvements, if those renovations or remodeling projects will give you a bigger return on your investment than what they cost.
Home Loan Refinance Tip #10: Be patient. Due to the home loan refinance requests spurred by the low interest rates, some lenders may take 90 days or more to process a home loan refinance.
Reader Comments (Page 1 of 1)
11-30-2009 @ 12:47PM
Carole said...
As a small business owner in construction related industry we are having a difficult time with the mortgage (FreddieMac), though we are still on time. I inquired and sent ALL proper paperwork in for a loan modification but told that we didn't qualify because we "owned our own business". "Sorry, there is just no program out there for people like you"! If that is true then it is obvious that "O" could care less about small business OR the American people.
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11-30-2009 @ 6:30PM
Pat said...
For crying out loud, how do you take one isolated case and turn it into "O" not caring about the American people? Did you ever consider that the person who handled your application didn't know what they were talking about (they didn't)? Or that your income did not qualify you for a new loan, even at a lower payment? Or that the proper expression is "couldn't care less"? Grow up and join the real world.
12-01-2009 @ 10:19AM
Ken said...
The reason you don't qualify is that either a- your income is too low to support the new loan paymen or b- you cheat on your taxes so badly that the true income you receive is not properly taxed and I don't feel sorry for you one bit. Self employment is NEVER a reason a loan is not approved. I know because I have been a lender for 25 years. Quit whining about the government not doing anything and take responsibility for yourself.
12-01-2009 @ 3:40AM
Dennis said...
I tried to refinance and I meet every criteria easily. I live in a rural area that has always had low housing turn over but our appraisal values have actually increased. Since there are no comps the banks won't touch anything on our whole area. I know of several home sales and refi's that have not gone through because of this. My questions is how can we have comps if we don't have a lot of sales and how can we have sales if we don't have comps.
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12-03-2009 @ 3:15PM
Jarrod said...
try a mortgage broker. can use a variety of sales and programs to help you out. Banks are more conservative now than ever. Im sure you have plenty of comps, they just don't want to use them. I have seen it more and more lately.
12-03-2009 @ 4:56PM
Travis Glies said...
Hello Dennis, I would be more than happy to help you out in your situation. I am an Asst. Manager of a Federally Chartered Bank licensed to do all real estate transactions in all 50 states. I have 55 different banks I can do business with along with our own bank. Please feel free to contact me at travis.glies@enmcdirect.com.
12-03-2009 @ 3:28PM
Jarrod said...
Who comes up with these tips??? One...Find someone who does FHA loans. You can go to 97.75 percent of the homes value and get better interest rates than a normal "conventional" loan at 80 percent loan to value. "Banks" should be your last choice in a refinance they may have some lower fees, but the interest rates are much higher which will lead to a higher monthly payment. Two...Who takes up to 90 days for a refiannce? Unless you are a bottom feeder FHA lender (which goes down to a 550 credit score) The average loan shouldn't be more than 15 days from start to finish. Three...Shopping is good, but make it quick. The longer you wait the worse you can be. If the first person you spoke with three weeks ago offers you the best program, by the time you call them back and say okay to the product, it could have changed. With the way the rules in lending are changing you never know what is going to be around tomorrow. You would be better off to check references of the person you are working with or see their BBB rating.
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12-04-2009 @ 4:30PM
Ryan said...
If we shouldn't use banks to refinance, then what should we use?
12-07-2009 @ 12:43PM
Joe said...
You can use any direct mortgage lender. Some of the largest are Bank of America, Citi, Chase, Quicken Loans, and Wells Fargo to name a few. All of these lenders have very competitive rates.
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