If you are a homeowner that is looking to refinance your home, it is always a good idea to educate yourself on the process of refinancing. In the economy of today’s world, the rules are not as black and white as they used to be, and while it may seem easy to get approval for home refinance, the reality is that actually only about half of the applicants actually get approved. Approval depends on a variety of factors, including your mortgage payment history, present employment and income, and your credit score. There are a variety of common mistakes that people make when applying for refinance, and by knowing what to expect beforehand and being fully prepared as well as realistic about your finances, you can improve your chances for approval and obtain the funds you need.
Online lenders are becoming increasingly popular when it comes to refinancing. The reason for this is that it is much more convenient for the borrower to fill out an online application, and the borrower will usually know within 24 hours if they were approved or denied. The online route also saves the potential borrower from embarrassment if the loan happens to be denied. While there are some online lenders that are known for their deceptive practices, a variety of companies including Quicken and GMAC offer the option of applying online, and these lenders are trusted professionals.
Taking a Good Look at Your Finances
The first step you should take before applying to refinance your current mortgage online is to determine the amount of equity in your mortgage. If you have over three percent, there is a good chance that you will be approved, and usually anything less than that will most likely lead to a denial of your application. The reason for this is that with the growing amount of individuals looking to refinance, lenders are becoming more cautious about who they approve, especially in the aftermath of the real estate crisis. Calculating the amount of equity you have in your home before applying will give you a good idea on whether or not you will be approved, and it is a simple step that will save you time in the long run if it turns out you are under three percent.
The main reason that homeowners choose to refinance is that they are looking for a lower rate than the fixed rate they started out with. With the fluctuating economy, homeowners are noticing that mortgage rates are lower than a few years ago, and they are hoping to refinance in order to save money and keep their homes. Homeowners with adjustable rates are also noticing that their rates are going up, and when they initially applied they did so due to the fact in theory, they believed their rates would go down over time.
Preparation is Key
By taking the time to research online mortgage lenders as well as calculating your equity and possible rates, you will have all the tools needed in order to successfully apply and obtain refinancing. By taking a realistic approach and working with a reputable lender, you will secure the future of both your home and finances.