Every refinance mortgage product comes with its qualification requirements. It is not difficult to find out if an applicant will be approved for that specific product. Everyone can find out the best rates for their circumstances fairly easy with online quote systems. However, if a homeowner wants to get absolute best refinance mortgage offer on the planet, this is what he needs to do;
Have High Credit Score to Qualify for the Best Refinance Mortgage Loan
When a bank puts out a mortgage offer, minimum qualifying credit score is already decided. Anyone wanting to improve his credit score to qualify for the best home loan on offer must start with checking his credit score. If his score close to what is required, he may improve it before he applies. If it is too far off, it may take a long time to achieve that score. According to industry reports one in every three credit report has errors. By getting these errors corrected by either the credit agency or the related originator score can be improved. Reducing debt to credit ratio would improve credit score as well.
Loan to Home Valuation Ratio Must Be Sufficient
Lenders decide up to how much of the value of the property they will lend for almost all their products. Should the appraisal of the property come lower than expected, homeowner may consider paying down the loan so that he can qualify for the best rate. This is known as paying points or cash in refinance. Taking into account the savings they will have, this may not be a bad route to take. Homeowners will save money in two ways, if they can come up with cash. Due to reduced loan, they will pay less interest over the term of the loan and save more with the lower rates they qualify.
Household Income Should Cover the Loan and Other Expenses Comfortably
High spending households may not qualify for the best rates. Regardless of how much they earn, they have to be able to demonstrate that they can pay all their expenses without any problems. Expenses include monthly mortgage payments, credit card payments, other loan payments, school fees, utilities, grocery spending and so on. In addition to that their total income must meet the minimum required level. There are different ways of calculating this. The simplest way would be income multiplier. For example, if a lender uses income multiplier of 3, the applicants can only qualify up to 3 times of their annual income.
Providing applicant meets these main requirements, other issues may be overlooked by the underwriters. Most lenders do not leave any leeway on those points for their underwriters to decide on. They are set in stone.
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