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Time to Consider Refinancing

Should you consider refinancing now? If there ever was a time for low interest rates, the time is definitely now. It is a great time to consider refinancing if you are currently locked into an adjustable rate mortgage, an option arm mortgage or any other designer type mortgage that was popular several years ago. Fixed mortgage rates for a 30 year mortgage are around 5% or even below at this time.

Refinancing is an important decision to make and for many, at this time, it can be a major tool to save some money during these hard economic times. Keep in mind the following tips if refinancing is something you are contemplating.

Good credit will make refinancing easier. Try to clean up any questionable credit issues as soon as possible. If items on your credit report are inaccurate and need to be updated, ask your lender if a re-score is possible.

Keep your job as you will have to prove employment and income. Save your payroll receipts for proof of income and remember that it is possible that you may also have to produce income tax returns.

If you already have a low fixed rate mortgage that is higher than what is being offered now, it may not be wise to refinance. It is generally recommended not to refinance unless you will be reducing around 2 points on your interest. As rates were quite low several years ago, many people locked into fixed rate mortgage back then. Going slightly lower will save a few dollars but will add years on to your mortgage.

Get your documents prepared ahead of talking to your lender. This will eliminate a lot of stress for both of you. Documents include current mortgage statement, pay stubs, w2's, current bank statements, 401k's, ira's, and other financial asset documents you may have. Credit card bills and debts should not be required unless they are going to be consolidated into the loan and paid off at closing. Documents for the property that are needed are copies of the deed, survey and title insurance. Having a copy of the survey and title insurance will save you money. As long as no new changes have been made to the property such as a pool, the previous survey can be used and a reissue credit can be obtained with the prior title insurance.

It cannot be stressed enough about having these documents ready when refinancing. These may be all that you need. If any other documents are necessary, the lender will definitely let you know.

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