- 1). Check your credit to see if you qualify for a mortgage refinance. Negative entries on your credit report such as late payments, collection accounts and charge-offs, along with a low credit rating, can hurt your chances of refinancing your mortgage. Plan ahead and make credit improvements. Pay all bills on time and reduce your debt to help increase a low score.
- 2). Gather payment stubs and income documents before approaching a lender. Mortgage lenders want to see proof of income for a refinance. Be prepared by making copies of your tax returns and other income sources.
- 3). Schedule an appraisal to determine how much your house is worth. Lenders vary and some will not refinance your mortgage unless you have a certain amount of equity. Talk with a mortgage broker to research different home loan programs. Ask about the required equity for each program, and then have the house appraised to see if you meet the criteria.
- 4). Save money to pay your settlement fees. Refinances are expensive and you're responsible for the costs incurred with this process. Settlement fees are paid at closing, and they're approximately three to six percent of the mortgage balance. Use personal savings or ask the lender to roll the settlement fees into your new mortgage loan.
- 5). Shop around. Get a refinance quote from your existing mortgage lender and at least two additional lenders to compare rates and terms. Using a broker (see Step 3) is a quick way to get multiple quotes from various financial institutions.
SHARE
