10/11/2010 You may have done a lot of research on the value of a mortgage refinance and the steps in the refinance process, but if you want to get the best mortgage rates and save the most money, there are at least five things you must do before you even apply for a new loan.
1. Set goals. Before you take any financial action at any time in your life, you must know what your goals are. What are you plans for the long term? Where do you hope to end up? When do you want to retire? Do you plan to be debt free? Do you plan to use your home to build wealth? Consider these questions and others, and use them to help you define financial goals for your life.
2. Determine your reasons for refinancing. Maybe you've heard that refinancing can save you money. It can. But it doesn't save you money in every case. In fact, many homeowners who refinance actually end up paying more money in the end because they've taken out loans with longer terms. A mortgage refinance is not a one-size-fits-all product. Determine what your needs are, based on your goals, and select the refinance package that fits.
3. Find out the value of your home. Lenders typically want to see that you have equity in your house before they'll allow you to refinance. The only way to determine if you have equity is to know the market value of your home. Find out what this value is before you seek a refinance.
4. Know your credit score. Your credit score will hugely impact the terms and conditions of the loan you are able to get. If you realize that your credit score isn't what you need it to be to get the loan that you want, don't bother applying. Check this first.
5. Research lenders. This is the most important part. Before you submit an application for a refinance loan, make sure you know what you're going to get. Find at least five different lenders and compare what they offer. Compare mortgage rates, compare loan terms, compare closing costs. Compare their customer service abilities. These things are important and can have a huge impact on your loan.
With these five steps complete, you'll be ready to apply for a mortgage refinance.
