Here I will break down the 4 most important factors that are considered during a home mortgage refinance. Mortgage rates in 2009 are at all time lows across the country, refinancing can save many homeowners a lot of money every month.

*Your credit score
Credit ratings play a key role in home refinancing. It will directly affect your loan approval, rates, terms, and conditions. You should request a free credit report from all of the major credit bureaus yearly and review it for any inaccuracies. If you have filed for bankruptcy and 7 years have passed that information should not show up on your credit score. This is an example of why you should be familiar with your credit score, and make sure it is up to date and accurate. The biggest factor of your credit score is your payment history. If you have made timely payments since you have established credit, you will only gain a positive credit rating. Other things that are taken into account are the type of debt you owe, the number of new applications for credit you have applied for, how much you owe, and the length of your credit history.

*Payment history on your mortgage.
Having a bad credit score does not mean that refinancing a mortgage is out of the question. If you happen to have a bad credit score, or even a good one, and have made every single mortgage payment on time in full, or ahead of time more than was due, you still can save through a refinance. Your mortgage provider knows that with them, with your home, you have a 100% credit rating, and will take that into account when trying to find a refinance that is right for you, that will save you money.

*How much you owe on your current mortgage.
How much you owe on your existing mortgage also will affect your mortgage rates. If you happen to be over 50% paid on your mortgage, and have been good with timely and in full payments, you are almost assured to refinance into a much better rate and save some money monthly doing it. However, if you are looking to refinance a relatively new loan the opposite applies. There will be a lot more questions from your mortgage lender if this is the case. He will want to know a lot about your financial situation, your plans, and extremely detailed financial reports. Which is understandable considering the lender will be taking on a lot of potential debt if you mortgage is newer.

*Choosing the right mortgage lender.
You need to take into account the type of mortgage lender you are working with. Big companies that have been around for a long time have the resources, contacts, and knowledge to provide some of the lowest rates possible. They can afford to take bigger risk loans and can handle the cost of a little negotiation from you on percentage points. However, it is usually harder to get approved from the big guys without great credit history, or a lot to lose. Smaller companies tend to take less risky chances with their limited funds and risk handling abilities. You must choose wisely, use the internet to research potential lenders.

-M Petrone

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