refinance mortgage rates

Lew Sichelman gives some tips on how to refinance.

With more rate cuts on the way, this is the time to get ready.

How? What documents do you need? What’s the scoop?

Here we go:

mortgage refinancing

Now, lenders are being far more picky.

Keeping in mind that you may need to move quickly, now is the time to obtain copies of your credit report from the three major credit repositories — TransUnion, Equifax and Experian. You are entitled to a free credit report once a year from each agency. Go to www.annualcreditreport.com or call (877) 322-8228.

home refinancing

Don’t worry that the three reports don’t match. The repositories take information from different trade lines.

Doing so “will have an immediate and positive effect” on your credit score, said Bruce Brown, president of First Security Mortgage Co. in Kansas City, Mo., and a certified mortgage-planning specialist.

You’ll need documentation of wages, savings and other assets. To prove earnings, you’ll need your last three pay stubs. If you are self-employed, the lender will want to see signed copies of your last two tax returns and a current profit-and-loss statement. You’ll need some cash too. You’ll probably be paying discount points, origination fees and other costs.

Title-insurance policies, for example, are often priced up to 70% lower when the same company that wrote the original policy reissues them.

You should receive an estimate of your closing costs when you apply for your new loan. But remember, these figures are subject to change, so be prepared to pay more. If you are short on funds, though, you may be able to roll the charges into the loan.

Determine whether your old loan has a prepayment penalty. If it does, you can pay it from the equity you have in the house. The lender will want a list of current debts, including mortgages on your other real property, car loans and credit-card accounts, with account numbers, plus a list of your checking and savings accounts with the account numbers.

If you are a foreign national, you’ll have to prove you are in the United States legally.

Another issue for lenders is proof positive that the house is worth what you say it is. You might come up with the same properties as the lender’s appraiser. “The market is so volatile today that we’ve seen rate swings of three-eighths to a half a point in a single day,” said Brown of First Security Mortgage. Your best bet, of course, is to start with your current lender. Often, your lender will offer a discount if you stay.

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