What should you know before you apply to refinance?

Before you refinance

Is your kitchen in desperate need of a major update? Is your child approaching college-age and you are looking for some extra money? Or are you just looking to loosen your financial belt a little bit every month? You may be thinking of refinancing your home to save money or to make home improvements. Before you begin contacting lenders there are few steps that you should take in order to prepare for a refinance.

Check your credit

Your credit score will be one of the main factors in determining how much money you are able to borrow and at what interest rates you can get. If you don't know your credit score you should find out. To find out your actual credit score you may have to spend a little bit of money however it will be worth it in the long run. There are places available where you can get a free credit report which will also help you in determining if you are able to refinance.

Run the numbers

Refinancing might be the answer to several of your issues however you need to determine if it is actually possible. You need to consider the long-term loan and your future retirement and age. You may not want to take on a 30 year loan if you are much less than that a way from retirement. A 15 year mortgage might be a better option. One of the things that you can use to help you is an online refinancing calculator before you decide if refinancing is right for you.

Your home’s value

Knowing your home’s current market value will be helpful in the refinancing process.  Do some research on recent sales in your area and comparable homes. This will give you a rough estimate of how much your home is worth. Once you have the estimated value you should compare that with how much you currently owe on the home. Most lenders like to see that you owe less than 80% of your home’s current market value.

Financials

An important piece of securing the loan is being able to pay it off and make monthly payments. If you have high balances on your credit cards and you're getting close to your credit limits you should attempt to pay them down prior to getting a review prior to refinancing. High balances will only lead you to higher interest rates when applying for loans. Also paying your bills on time and keeping lower balances will show the lender that you are a reliable client.

Research Mortgage Lenders

A good place to start is with your current lender. It is important for lenders to keep your business so they may be more willing to work with you to lower your interest rates. However there are many lenders out there who have varieties of options. Do a little research and seek out comparable rates from several different lenders so that you can be assured that you are getting the best possible contract.

When you are ready to refinance, call Florida Real Estate Lending. Our professional mortgage brokers will work with you and provide you with many options for your refinancing needs.

Mortgage Pre-Qualification

What does it mean to “pre-qualify” for a home mortgage loan?

If you've begun the search for a new home and are going through the mortgage process and you've probably heard the term pre- qualification. Many websites of lenders have an area that you can easily click on that typically says “click here to prequalify”. It sounds like a simple and easy process and it pretty much is, however there are some things you should know about what prequalification means before you click that link.

What does it mean to prequalify?

Basically when you prequalify for a loan you will be given basic idea of the amount that you are eligible to borrow. This in no way guarantees you that lending amount.   It is just a stepping stone to the larger and more in-depth process of securing a mortgage. In fact pre-qualification is the prequel to getting preapproved for a loan.

How does it work?

In the prequalification process, the lender will review the basics of your financial situation and base the loan amount on those numbers. It is more or less a free service of a mortgage lender and is meant to draw you in as a possible customer.  In order to prequalify for a loan, you don't have to provide too much information. The basics include your name, phone number and a few pieces of your financial background. The next step is that you will be contacted by the lender and they will tell you generally how much you can borrow or whether you could be approved for a loan or not. You are also not obligated to even use that lender when you secure an actual loan.

Is prequalification necessary for me to get a loan?

If you are looking for a new home, it is likely that the seller will not take into account if you have been prequalified for a loan. Since it doesn't guarantee financing or a loan it won't really matter. The more important thing that you need to do is get pre-approval rather than prequalification.

Why should I click the prequalify link?

Prequalification is mainly for your own purposes to reach out to a variety of lenders. It is a tool that will get you a call back or an email from different mortgage companies. There is no guarantee that you will qualify for a loan from these companies but it will get the ball rolling a little quicker with lenders. It may also help you determine if this is the right time for you to buy or not.

As far as prequalifying for a mortgage goes it is not necessary, what's better is getting preapproved for a mortgage. However, going through the prequalification process is helpful to get things moving with your home mortgage search.   If you are in the market for a new home, contact the lending experts at Florida Real Estate Lending. Our experienced agents will help you find the best mortgage and interest rates so that you can soon be in your dream home. 888-631-5993

What affects my credit score?

Factors That Decide Your Credit Score

When you go to apply for a mortgage one of the first things your lender will want to know is your credit score. Your credit score is a very important factor that determines whether you can qualify for mortgage. It is used to show lenders how financially responsible you are. A higher credit score means that you are a less risky client whereas a lower score means that you may have issues securing a great loan and rate.

First of all you should know exactly how the credit score is calculated. The numbers on your credit report are calculated to create your credit score. There are five pieces to this calculation: payment history (35%), debt to credit ratio (30%), length of credit history (15%), mix of credit (10% ) and new credit(10%).

Payment history

Making payments for credit cards and other loans and bills on time carry the most weight on your credit score. Even one late payment can reduce your score. Therefore it's important to pay on time.

Debt to credit ratio

This is directly related to your credit cards. The amount of debt that you have on your credit cards is divided by the credit limit on the cards. The recommended ratio should be about 30%. If you are maxing out your credit cards on a regular basis you are probably damaging your credit score.

Credit history

Lenders want to see that you have a history of getting and keeping credit. The longer credit history you have, typically the better. Even if you have accounts that have zero balances you should try to keep them open as this will help your credit score.

Mix of credit

Having a variety of different types of credit accounts will help your credit score. It's important to have credit cards, retail accounts, car loans, and mortgage loans. Lenders want to see that you are able to maintain a variety of credit types.

New credit

Each time you open or attempt to open a new credit card you prompt an inquiry on your credit report. Every time this happens your credit score can be lowered about five points. You should avoid opening multiple credit cards at the same time as this will hurt your credit score.

When you are in the market for a mortgage your lender will look at many pieces to determine the rate and type of mortgage you that are available to you. Your credit score is a big factor in that determination. Be sure that you know how to properly manage your credit score so that you can be on your way owning your dream home. Want to find the right mortgage loan? or see if you qualify? Contact Florida Real Estate Loans today! 888-631-5993