It's best to consider a number of things before
you attempt to obtain any type of real estate financing, be it a first
or second mortgage, a cash out refinance or a refinance to combine
mortgages, or for lower interest refinance mortgage;
1. How much payment can you afford? This is especially crucial when
you are considering a refinance loan to pay off other types of loans
such as credit cards and automobile loans. Many lenders feel that all
of your bills (including mortgage payment) should not exceed 50% of
your net income. An industry accepted method of determining your net
income is 80% of your gross income. Payments for child support and for
loans you have cosigned or are a guarantor for are also considered.
Our handy payment calculation tool will give you an idea of how much
your payment will be on a specific amount loan.
2. Is there enough equity in the property to get the loan you want?
Many lenders are willing to grant loans where income and credit are
not ideal when there is sufficient equity in the subject property. The
rule of thumb is when the equity including the new loan amount is less
than 80% of overall value the terms will be more favorable.
3. What is equity? The formula for equity is simple. Determine the
market value of the property a Realtor or appraiser can give you a
precise figure, for a quick low priced online appraisal check out our
Low Cost Online Real Estate Market Analysis
Once the market value is determined subtract the amount that you owe
on the property.
Include in the amount that you owe first, second and third mortgages
(if any) past due taxes, home owner assessments (condos or community)
other taxes, liens, and levy. The result is your equity.
4.Is my credit report and rating in order or should I repair my credit
before I finance? In almost all circumstances you can save a bundle of
money by fixing your credit prior to financing. Obtain a copy of your
credit report ---.
If your fico score is in the700+ range you should qualify for the best
If your fico score is 600- 699 you may qualify for a decent rate but
fixing your credit may save you money.
If your fico score is 520-599 you are at the lower end of the
acceptable range and will most likely pay for it with a higher rate.
If your fico score is below 519 you are in the range of high risk or
what some companies refer to as "bad credit". Credit repair is
strongly recommended here.
5. How can I fix my credit and credit score? Order a copy of you
credit report. It is important to order all three major credit
This is to
ensure that you have the same information that your potential lenders
will have. Upon receipt of your credit dispute any listings that are
not yours or incorrectly listed. The dispute can be as simple as a
letter back to the credit bureau that you have no record of that
account. In many circumstances this will resolve the erroneous
listing. If the account is genuinely not yours and the bureau will not
remove it you may need the help of a professional
6. How can I find a low cost
lender? Find a lender that specializes in low cost loans. They will
shop your loan and offer you several options.
Time to refinance your house? Save money, find a
lower home loan interest rate. Lower rates can mean lower monthly
payments! Many national lending sources to choose from, find your best
deal today! Low Rates on Home Loans with Fast Approval! First and
Second Mortgages! Good credit or Credit problems! People ask; Can you
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