Mortgage, Credit Repair, Best Mortgage Companies
Interest rates are at a 50-year low, causing many homeowners to consider refinancing.
Angie’s List 10 Tips:
- Check your Credit: Lending guidelines have tightened up, making borrowing much more difficult for people with low credit scores. Before you refinance, pull your credit report and double check that the information is accurate and up-to-date. If there are any discrepancies, work with the credit reporting agency to have those cleared up before you inquire about a loan. While credit scores where once a contributing factor in determining the cost of credit, they have now become the overriding factor.
- Determine the Value: You now need more equity in your home in order to refinance. Expect the lender to request an appraisal and don’t be surprised when they bring in an appraisal management company to find a 3rd-party appraiser.
- Lock it In: By holding out in the hopes rates will go down further, you risk your home depreciating more or your financial situation worsening. Look for a lender who is willing to lock in a rate for at least 60 days.
- Get quotes in writing: Email is fine, but be sure your mortgage consultant gives you rate information in writing so you’re not surprised by a rate change when you go to close.
- Eliminate PMI? Private mortgage insurance is required whenever a conventional loan exceeds 80 percent of the value of the home. You can eliminate PMI if your home has at least 20 percent equity, based on a current appraisal. You can avoid paying PMI on a new loan by making up the difference at closing or by taking out a second mortgage for the difference.
- Borrow more? If you have the equity in your home and it makes good financial sense to do so, consider borrowing additional money against your refinanced mortgage to pay off higher interest debt. This could save you substantially over the life of the loan, plus the interest you pay on your mortgage is tax deductible, which is not the case on auto loans and other credit-based interest you pay. Again, consult with your mortgage professional to determine if this is best for you.
- Research your lender: Use an independent mortgage consultant, who can get multiple rate quotes with one credit pull. Check Angie’s List to read other consumer reviews of local mortgage professionals. Visit the local Secretary of State website to learn more about that broker’s credentials.
- Disclose all Income: If you rely on cash income from tips, etc., it’s important you account for all of that income to better your chances of qualifying for a loan.
- Ask for Closing Cost Guarantee: Beware of any lender that will not give you a written guarantee on the closing costs they estimate. Your costs could end up coming in a lot higher than initially disclosed. If costs do change, ask your mortgage professional for an explanation before you agree to anything. Include closing costs into your loan to avoid paying out of pocket.
- Know your Rights: Customers are entitled to a three-day grace period during which they can pull out of a deal. The lender must be notified in writing of the rescission within three days of the date of closing and has 20 days to return the customer’s fees.