How to Prep for Refinancing

Refinancing could help you to lower your mortgage rate, switch between an adjustable and fixed rate, or make other changes. To qualify for competitive rates and terms, you need to take some steps to prepare. Start by researching what to expect during the refinancing process. Here are some other steps you should take to get ready.

1. Check your credit score early. Don’t wait until the last minute to check your credit score. Look well in advance of when you are planning to refinance. You do not want to get caught off-guard if it is lower than you expected.
2. Check your credit report and contest errors. If there are issues with your score, the next step is to check your credit report. If your score is high, you can skip this. But if it is lower than is ideal, you should see what is contributing to it. Errors on credit reports are much more common than a lot of people realize. If you find some mistakes, you can contact the credit bureaus and request that the incorrect items be removed. If you are successful in contesting them, they will no longer impact your score. You can also look for other ways to raise your score, like paying off some of your debts if you have that flexibility in your budget.
3. Get your documentation for your income ready. When it comes time to apply for the refinance, you will need to verify your income. Gather your documentation paperwork in advance. Give yourself some extra time if you are self-employed, and especially if you earn your income unevenly throughout the year, or have recently made a change in your career.
4. Avoid taking on more debt. When you know you are going to be trying to refinance soon, this is not the time to be taking on more debt. Keep your credit utilization where it’s at now, or look for ways you can lower it. Put off major purchases that would force you to borrow money until after the refinance is complete.
5. Boot your credit score. Credit scores are partially determined by comparing your account balance to your credit limit.  Even if you pay your balance monthly the credit bureau will show the reported balance at the end of your statement dropping your score.  You an combat this by prepaying your credit card a few day before the statement closing so when your credit card company reports to the credit bureau your closing balance is $0. Credit bureaus also lower your score when you use several cards each month even if the purchases are small.  If you can also consolidate your purchases to one credit card leading up to pulling your credit report your score will typically be higher. Under certain circumstances boosting your credit score a few points can save you thousands in closing costs are get you a better rate saving you money every month.
6. Plan your closing cost strategy. You can chose a great rate with little or no closing costs.  If you do not plan to refinance again and plan to be in your home for more than 3 years you can save more money long term and buydown your rate.  Your fees can be added to your loan so you do not have to pay from your savings.
7. Prepare for a new appraisal. Refinancing requires your home to be appraised again. This is a good time to clean, declutter, make minor repairs if they are needed, and enhance your home’s curb appeal. If you have made improvements to your home since moving in, you should compile a list to share with the appraiser. For the day of the appraisal, corral any pets that might be rambunctious. If possible, have everyone step out of the house except the homeowner(s). Appraisers sometimes travel quite a ways, so be polite, and consider offering them a bottle of water when they get there.
8. Take your time. When you first bought your home, you may have been in a rush. A lot of people have to move on a strict timeline, or are afraid to miss out on a deal. So, they take the first good value they find, sometimes skipping the process of shopping around for mortgage rates altogether. You do not have to hurry when you are refinancing. You already live in the home you love, and are not going to miss out on your dream home. There are no other buyers to compete with. So, take your time. Keep an eye on mortgage rates, looking for a good dip. You can also shop rates with different lenders.

One of the easiest ways to do that is to work with a local mortgage broker like Blue Square Mortgage. We can reach out to our entire network of lenders to bring you the most competitive rates on a wide variety of mortgage products. That way, you can find a loan type that suits you at a competitive rate.

Refinance in Washington State or Colorado

The more prepared you are for your refinance application, the smoother the process will be, and the better the rates you might qualify for. Blue Square Mortgage can help you refinance anywhere in WA or CO. If you have questions about refinancing, or you are ready to schedule your consultation, please give us a call at (206) 352-6453. We look forward to connecting you with competitive rates.