Top 20 Tips for a Guaranteed Refinancing Approval

Top 20 Tips for a Guaranteed Refinancing Approval

Refinancing approval

Here are the top 20 tips and tricks that you need to know if you want a guaranteed refinancing approval right away.

Here you will learn things that will surely make big difference in the approval process of refinancing your home. You should probably want to print this notes before you will try to get a refinancing approval.

Note that this tips will only help you make a refinancing if you follow everything written here exactly. This twenty tips helped a lot of people to get their refinance and I hope they’ll help you too.

1. Write a formal loan modification letter.
   One very important factor is the layout of your loan modification letter. This will make big difference in the approval process. Write your letter as formal request for loan modification. Include the right reason for your financial problem and also the interest rate range that you will be comfortable with. Write about pay rise or pay cuts any changes that can change your present status. Along with it give your detailed information. Make sure to be totally honest, objective and clear.
2. Compare Interest Rates.
   Before signing a mortgage refinancing deal, be sure to compare interest rates between lenders. This should give you a rough idea of what you can expect, and how much you can borrow. The lower the rate is means the more you can borrow for cheaper, which ultimately results in savings. This also allows you to find a better lender, who is offering you a better deal. Always compare the interest rates of different lenders. This will help you to choose the best deal from several offered. The lower is the interest rate, it results in more saving. Before applying for refinance a home loan, know your credit report details. It may be not be that bad as you have thought of it. Paying off small unpaid debts can be an additional help. It is better to have few accounts than maxed out accounts.
   Also, make sure that potential mortgage lenders do not access your credit report. Too many people looking into your credit can result in a lowered credit rating. Typically, there is no guarantee on what other lenders will quote you, however, it will give a good idea of where you stand, especially if you know your credit score and tell it to them.
3. Always ask about the loan options available.
   Homeowners with really low credit score can use sub prime mortgage lender. They are specialized in bad credit mortgage refinancing loans. Secondly the interest rate can be lower than mortgage lender or traditional banks. Lowest interest rates are offered through ARM (Adjustable Rate Mortgage) loans, but there is a risk that ARM may increase and the payment may go high. Always listen and ask about the loan options available in your case. You may find the better option according to your requirement.
4. Know the details of your Credit Report.
   Before you apply for a mortgage refinancing, make sure you are familiar with your own credit history. Checking for mistakes or inaccuracies can save you a lot of time and hassle. You may even see that your credit is not as bad as you though it was.
   If you have the opportunity to pay off small lingering debts, or reduce the cards which are nearly maxed out, this can help. Having your debt spread among a few accounts is better than having accounts maxed out.
5. Get Better Mortgage Terms, Conditions, and Interest Rates.
   Typically, homeowners who want to refinance, but have a low credit score, need to use a sub prime mortgage lender. These lenders specialize in these loan types, and can often obtain a better interest rate than a traditional bank or mortgage lender. ARM (Adjustable Rate Mortgage) loans typically offer the lowest interest rates. There is a risk though that the ARM will increase, and therefore your mortgage payment goes up.
   Always listen and ask about all of your mortgage lenders loan options. Sometimes, you may find one you were not aware of that better meets your financial needs. Something like a chance to refinance your mortgage again in 24 months should your credit improve would be an example of a refinancing option.
   Homeowners looking to get a mortgage refinancing today need not really whether or not they will get approved. They should be concerned with what lender or bank is offering them the lowest rate possible. Lower interest rates are truly how a refinancing is the most beneficial for a homeowner.
6. Don’t rely on published rates.
   The rate you’ll ultimately receive will depend on a number of factors: the size of the loan, your credit score, the points paid (each point equals 1 percent of the loan amount), when the loan is expected to close (typically within 45 days), and whether you lock in the rate or let it “float.” If you float, you’re betting that rates will drop and you can lock in a lower one before the closing. Make sure you’re not charged for this privilege through a “float down option,” which is rarely worth the expense.
7. Be specific about the loan you want.
   The more precise you are, the easier it will be for a loan officer or mortgage broker to find the best rate. For example, do you want a 15-year or 30-year mortgage? Do you need a “jumbo” mortgage (more than $333,700)? Are you willing to pay points to reduce the interest rate? The answers to these questions will depend on several factors, including when you plan to sell the house and how soon you want to retire your debt. Only you know the answers, but the sooner you know them, the better.
8. Start with your current lender.
   If you’re a good customer (you hold a sizable mortgage, pay on time, and maintain good credit) your existing lender will probably do everything in its power to keep your business. The company may cut you a break on fees for things like appraisals, surveys, and inspections if the information is current and you meet other requirements.
   If you decide to shop around, ask your colleagues or one of your advisers for recommendations. Be cautious about using lenders you haven’t heard of. Before you send a lender any money or personal information (especially your Social Security number) call your state’s division of banking to see if any actions have been taken against the lender.
9. Calculate, calculate and calculate some more!
   Weigh the costs carefully of how long you will be staying in your home vs. how much of a savings you will be getting in a refinance. Make sure you include closing costs in your decision. You could find some complex refinancing calculators at amortization-tools.com.
10. Resist “no cost” refinancing.
    No cost doesn’t mean free. On the contrary: The closing costs are usually bundled into the new mortgage, which means you pay interest on them. The fees associated with a 30-year mortgage could cost you more than double what they would have had you simply written a check for them at closing. Or, if the costs aren’t bundled in, you’ll be charged a slightly higher interest rate. Either way, the lender wins.
    But don’t avoid refinancing just because you can’t pay the closing costs in cash. If rates have dropped enough, you’ll probably still come out ahead, even with a “no-cost” loan. Just do the math first.
11. Ask for the reissue rate on your title work.
    If you’ve taken a mortgage within the past two years, or are using the same lender, you might be granted this option, which can save you as much as 70 percent on your title work. However, if it’s been several years since you took out a home loan, or if you’re using a new lender, you’ll likely have to pay for a new title.
12. Make sure the new title is correct.
    The fact is, most people never see their deed before it’s recorded at the county court house. Ask the lender if you can review the title to the property before it gets filed, so that you can make sure it’s correct.
    This is especially important if you’re refinancing property that’s held in a trust. You have to make sure that the title company issues the new deed in the trust’s name. The mortgage company may take the property out of the trust and transfer it to either you or your spouse. If that happens, you’ll have to ask the title company to reissue the deed directly in the trust’s name after the loan closes. But if you catch the mistake beforehand and raise a fuss, the mortgage company will likely correct the title before closing.
13. Don’t escrow taxes and insurance.
    Unless you’re undisciplined, avoid putting monies in escrow to cover your property taxes and homeowner’s insurance. There’s usually a fee for this privilege that runs under 1 percent of the loan amount, in states where it’s allowed. Paying the fee will allow you to time your tax and insurance payments to your benefit. For instance, you may be able to prepay taxes that are due next year and use those payments to reduce your current tax bill. Moreover, you get to hang onto your money longer. That may be an advantage when interest-bearing accounts start paying more.
14. Carefully review the estimated closing costs.
    If you decide to lock in the rate, the lender will send you a “good faith estimate” of your closing costs within three days. Go over the numbers carefully, and compare them to the ones that appear on the final settlement statement (the HUD-1) from your previous mortgage. It’s reasonable to expect that you’ll pay similar fees. At least you’ll have a good idea of what should or shouldn’t be included in the total closing costs.
    If you don’t like something you see, call your lender or broker immediately and ask for an explanation. Many of the fees are negotiable, especially if you’re keeping your business with the company that holds your existing mortgage. If your lender won’t budge, ask that your file be “pulled”—this essentially says that you’re threatening to take your business elsewhere. Yes, you risk giving up the locked-in rate, but your expenses will be nominal at this stage. In fact, before you apply with any lender, ask its loan officer or your mortgage broker if any required up-front fees are refundable.
15. Give yourself plenty of time to close.
    With most refinancing, your file is turned over to a closing or title company, which dictates the closing details. Like the lenders themselves, these firms are swamped when interest rates are low. Moreover, appraisers get backed up and can be difficult to schedule. So don’t expect the closing to happen as quickly as anyone promises.
    The key is to allow adequate time to close the loan before the rate lock expires. Many lenders give you only 30 days. To be safe, shoot for 45 to 60. If mortgage rates are low, it’ll be worth it to pay the one-eighth or one-quarter of a percentage point that some lenders will charge to extend the commitment period.
16. Don’t assume you won’t qualify because you have little equity in your home.
    Many lenders require that you have at least 10 percent equity in your home (i.e., a loan-to-value (LTV) ratio of 90 percent or less). But there is at least one lender in every market that was willing to underwrite loans in which the borrower had only 5 percent equity in the home. Beware, however, that low equity loans can involve relatively high mortgage insurance costs. You can find out if your loan is owned by these organizations by calling the company to whom you send your monthly payments. That company may not own the loan, but it can find out whether the secondary market agencies do by searching a computerized database.
17. Make sure that your original mortgage does not have a pre-payment penalty.
    Make sure that your original mortgage does not have a pre-payment penalty or early payoff penalty of any kind. Sometimes people will get into their mortgage with the mortgage having a pre-payment penalty and they will not even know about it. Pre-payment penalties usually range from 6 months to 3 years with a penalty for an early payoff. The penalty is usually about the amount of 6 months worth of your mortgage loan interest, but this varies. You would have to be able to have some significant payment and interest savings on your refinance loan to justify refinancing a mortgage loan with a pre-payment penalty.
18. Always pay attention to the interest rates & the closing costs.
    When evaluating different lender offers, in the mortgage loan pre-approval process, pay closest attention to the interest rates they are offering & the closing costs. These are the two biggest factors that will help you figure out which lender is right for you. If one of these two factors is too high, it could offset the benefit of refinancing for you.
19. Get your lender to give you a commitment.
    Get your interest rate and closing costs in writing as soon as you decide on a lender to work with. Get your lender to give you a commitment in advance of all of the costs that will be involved with your loan. Find out if the refinance loan you are getting has a pre-payment penalty as well. Sometimes lenders will leave out important information like this, if they think it might scare you away from refinancing with them.
20. Close all the old accounts.
    People with good credit tend to have too much credit, and too many old accounts that they no longer use. Lenders might view this as a risk in offering you a good APR. As a result, it is important to close all the old accounts.(this applies especially to auto refinancing).

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