Ready to apply for a mortgage refinance? Increase your chances of getting approved by knowing what to expect!
Below, we’ll share 5 tips for mortgage refinance success.
Tip #1: Establish your mortgage refinance goal.
Before you apply for a mortgage refinancing, know your ‘why’ first. What’s your goal for refinancing? Some common goals for this type of refinance include:
- Lowering interest rates and monthly payment
- Changing an adjustable-rate mortgage to a fixed-rate mortgage
- Paying the loan off faster with a shorter-term
Knowing your refinance goal will help you make smart decisions as you go through the process.
Tip #2: Choose which mortgage refinance option best suits your needs and situation.
Once you’ve established your refinance goal, you can then choose which mortgage refinance option best suits your needs and situation. Do your research. Or, you can discuss your options with your lender to ensure that you get the best possible option that meets your needs.
Tip #3: Check if you have sufficient equity to refinance.
When talking about home equity, it is the difference between the value of your home and how much you owe on your mortgage. Typically, your refinance lender will do a home appraisal to check your home’s value. In some cases, you’ll need sufficient equity to refinance your home.
However, the amount depends on the type of loan you want to take out and the purpose of your mortgage refinance. For instance, you’ll need more equity for a cash-out to refinance compared to a rate-and-term refinance.
Tip #4: Get your finances in order.
Lenders like to see that you’re financially stable. If you carry credit card balances, or if you’re getting close to your credit limits, make sure to pay down your cards. Also, it helps to show that you have enough liquid savings to pay the mortgage off for several months in case of a job loss. So, make sure to build up your savings account as well.
If you don’t have the extra cash to pay down debt or build your savings, a mortgage refinance is still possible. Discuss your situation with potential lenders – this will help you determine whether or not it’s a smart time to apply for a mortgage refinance.
Tip #5: Quickly respond to lender inquiries.
Generally, mortgage refinances take 30 – 45 days to complete. To ensure that your refinance goes through as smoothly and quickly as possible, make sure to respond to all inquiries from your lender as soon as possible. For instance, your lender might ask for additional documents to support your financial history. Try to send these documents within a few days of their request.
There are some steps you can take to ensure mortgage refinance success. First, establish your refinance goal and choose which mortgage refinance option best suits your needs and situation. Then, make sure that you have sufficient equity, get your finances in order, and respond to inquiries from your lender as soon as possible.
For mortgage refinancing assistance and other mortgage-related inquiries, don’t hesitate to contact our team!