If your a homeowner who is considering a mortgage refinance sometime down the road, it is best to prepare early, maybe even now. It may be a few years off from happening, but the more you do in advance, the better the results will be. Just like anything else, the more you prepare the easier it is, and the odds of you getting what you want increase dramatically.

One of the best things you can do if you have the time is pay down credit card and other debts. When you have paid the debt off on an account, close it immediately. This will make it look better as you do not have so many open lines of credit, and your credit may improve as a result. While not having any open credit accounts may be a problem, having to many is also a problem, but an easier one to fix.

Also, if necessary, take on extra hours or another part time job or income. This can dramatically increase your debt to income ratios, and push you into a much better category with better mortgage rates, terms, and conditions. The higher your income to debt is the less of a credit or financial risk you appear to be to a mortgage lender or bank.

If you are preparing for mortgage refinancing early enough enables you to save up as much cash as possible so when you actually do refinance you can put down a larger payment. If possible, try to get 20% of the total loan as a down payment. This will give you a lot of options, and really reduce your interest rates, and monthly payments. If 20% is not possible, remember that the more you put down now, the less you will pay in the long run. The bigger down payment, the better, end of story.

-M Petrone

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