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Wednesday, February 25, 2009

Refinancing Your Mortgage The Right Way

By Mijnadviseur

With current interest rates as low as just over 5%, refinancing your mortgage can be a good choice. However, banks and lenders currently have pretty strict policies and lending criteria, so it's not easy to get accepted.

If you take the trouble to prepare, you increase your chances of acceptance by a lender. In this article we will go over a few things you need to know before sending in your application for a refinance.

Home prices are getting lower by the day. This, coupled with the increase in inventory on the housing market, lowers the amount of equity you have in your house. If you currently owe more than your home is worth, getting a mortgage refinance won't be easy. When an appraiser comes by, he will always make an appraisal of the value in today's housing market, not the housing market as it used to be.

The government has announced that there are plans in the making to help homeowners that are in a negative equity situation. The exact details of these plans have not been made public yet.

A bank also looks at your income. If you can't show you have sufficient income to do a refinance, you will not be accepted. There are many spots on the Internet where you can check what you approximately can get when applying for a mortgage. Make sure you have sufficient income before going through the trouble of a refinance.

Before you get a mortgage refinance, they will have a look at your credit score. If it's really bad, you'll almost certainly get rejected. If you do get accepted, you will be paying more than the average person with an average credit. If at all possible, improve your credit score before applying for your refinance.

When considering a mortgage refinance, always look at the total costs of this decision. You have to know if the refinance is worth it. You will face some added costs when you decide to refinance, so know that you will be living in your home for another couple of years in order to recoup the costs.

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