Take the Worry Out of Refinancing
Looking to refinance, but nervous about all the mortgage news? You may be concerned that you may not be able to get qualified for a new loan. The good news is that lenders want qualified borrowers now more than ever. Follow these steps to know just where you stand.
Find out your credit score.
Go to www.annualcreditreport.com to obtain a free copy of your credit report. While you can get your report for free, it’s well worth the fee to get your actual score. (You can get your score through the LendingTree credit monitoring service.) If your score is above 760, you are considered an excellent credit risk and may qualify for a lower interest rate. If your score is below 660, you may have difficulty obtaining a loan until you improve your score. If you fall somewhere in between, you may not have trouble qualifying, but you may pay more in interest than people with excellent credit.
Evaluate your finances.
In addition to your credit score, lenders also look at your debt-to-income ratio, which is a calculation of your housing expenses plus recurring debt payments as a percentage of your pre-tax income. Your mortgage payment, property taxes and insurance (but not utilities) should be no more than 28 percent of your gross income. Your total debt – housing plus any other loans, alimony/child support and minimum credit card payments – should be no more than 36 percent of your gross income.
Check the affordability of your refinance.
If your payment will go up, make sure the increase isn’t going to put too much of a squeeze on your finances. Check your current mortgage to see if there is a penalty for paying off your loan early (some lenders consider a refinance a pay-off).
Shop around.
It's a good idea to get offers from multiple lenders and compare the interest rate, terms and fees. And let them know you are comparison shopping: this will give lenders an incentive to offer you their best rate and terms. Don’t just accept a loan because a lender approved you.
Get Started Now!
- Check Your Credit Report & Credit Score now!
- Start a Loan Request
- Sign up for our News Feeds
- Have Questions? Call 1-800-GET-SMART (1-800-438-7627)
