Mortgage Refinancing - How to Prepare for Mortgage Refinancing

Mortgage refinancing is a stressful process for many homeowners. No one wants to overpay for their mortgage loan; however, nearly everyone overpays when mortgage refinancing one way or another. People overpay because they do not understand how retail mortgages work and often fail to close before their rate guarantee expires. Here are several tips to help you organize your mortgage refinancing efforts and make the process go smoothly.

Mortgage Refinancing Basics

Before approving your mortgage refinancing loan, the new lender will evaluate your credit score, income, assets, and employment status to determine how much of a risk you pose for lending. The lender will require documentation prior to approval. It is important to provide all the requested documentation as quickly as possible to avoid unnecessary delays before closing on your new loan. As soon as the mortgage lender guarantees your interest rate, the clock is ticking until this guarantee expires. If you are unable to close before this time is up you will lose the interest rate and points the lender promised you.

Mortgage Refinancing Documentation

In order to document income your mortgage lender will typically want two years of income verification. This documentation can be in the form of pay stubs, tax returns, or w-2 statements. If you are self-employed the lender will want two years of your tax returns minimum. You will also want to document your assets with statements from your checking, savings, and investment accounts.

Mortgage Refinancing & Your Credit

Before you submit the application for a new mortgage you should always perform a bit of housekeeping on your credit reports. There are three credit agencies that maintain credit records for you. You will need to request reports from Equifax, Experian, and Trans Union and carefully review the records for errors. If you find any errors in your credit reports dispute them and make sure the error is corrected before mortgage refinancing. In addition to record housekeeping you should avoid making any large purchases with credit prior to applying for a mortgage. Financing large purchases before mortgage refinancing has a negative effect on your credit score.

You can learn more about mortgage refinancing while avoiding common homeowner mistakes that will cause you to overpay by registering for a free mortgage refinancing guidebook.

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