Refinance Your Mortgage 101

Refinancing an existing mortgage is easier than what most people think. When there is a system to follow, the process will go smoothly. People need to be educated in the loan process so that they have a good understanding of what they are going into. By doing this, unnecessary financial pitfalls caused by lack of education will be avoided.

The following are systematic yet simple guidelines on how to refinance your existing mortgage:

Research the market value of the property. Have an idea how much your property is worth. You can go to www.zillow.com to search for comparables. This way you can roughly estimate how much you can borrow against your property.

Organize your paper works. Gather the following documents and put them in a folder. These are general documents that banks require in order to qualify you. Some of the documents may not be needed depending on the loan program you will be qualified for, however, it is always a good practice to be prepared just in case they require it. Having all the documents ready before shopping for a loan will take you one step ahead of the game.

1. 2 Years Tax Returns (1040's and all schedules if Self-Employed)
2. 1-month Pay Stubs
3. Mortgage Information
4. Valid Identification (Driver's License & Secondary ID)
5. Non-citizens (Green Card)
6. 2 months bank statements (Savings, Checking, CD)
7. Retirement Accounts (401k, IRA, etc)
8. Bankruptcy Papers (if applicable)
9. Rental Agreement (if applicable)
10. Insurance Information
11. Fire Hazard Insurance
12. Home Owners Association
13. Corporate Tax Returns (if applicable)
14. YTD Profit & Loss (For Self-Employed)

In addition to the documents mentioned above, complete the Uniform Residential Loan Application or Form 1003. You can download the form from www.efanniemae.com. When filling out the form, leave the Social Security Number blank until you have decided which company to use. This will prevent them from pulling your credit report.

Order your credit report and credit score. Examining the contents of your credit report ahead of time will give you a chance to correct any incorrect information if there are any. In addition, knowing your credit score is a tool that you can use when shopping for any loan. If you have a good credit score, the better rates you will get which results to saving you a lot of money in interest.

Several resources are available online to get a copy of your credit report

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