The main purpose of refinancing is to have lower and affordable monthly mortgage payment. This may be achieved, if the lender offer a lower interest rate as this saves you money by reducing your mortgage payment. But to enhance your qualification for the best mortgage refinancing rates you must position yourself as a highly qualified candidate.
These are the necessary steps to take:
1. Your Refinance Should be Below Non-Conforming Limit
When the home loan principal is over a certain amount, it will be considered Non-Conforming or Jumbo. The higher risk of non-conforming loans makes it interest rates to be higher. To enhance your qualification for the best mortgage refinancing rates, your new home loan must be considered as “Conforming”. The limits are varied from each state, so ask your local lender what the limit is.
2. Good Credit
Before you take any step towards refinancing, know what your credit score is. You have every right to check your credit score as a consumer. Meanwhile, knowing your credit score will have no effect on your score. You are qualified and entitled for the paramount mortgage refinancing rates if your FICA score is 750 or even higher. If your credit score is below 750, try to put off refinancing for sometimes to raise your credit score above 750 and thousands of dollars will be saved on your home loan.
3. Eliminate other Debt
Mortgage lenders will like to know if you will be able to repay your new home loan. If there is another debt, like car loan, it means the available cash does not guarantee the repayment of the new refinance loan. Reduce or pay out all other financial debts and you will be more eligible for a better mortgage refinancing rate, so, reduction of debt enhance your qualification and improve your credit score.
4. Proof a Consistent Income
Loan applicants must demonstrate their ability to make monthly payments to the bank. If you can show regular and consistent income, you will get good mortgage refinance rates. Provision of your recent paychecks and/or tax filling paperwork should be enough.
5. Have Equity In Your House
The lenders like to know that the house is worth more than what they are lending to you. You will be eligible for a lower interest rates, if your house has more equity as your house stand as collateral for your new mortgage. So for a better result, have more equity in your home.
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