Homeowners who are thinking about refinancing their mortgage, should begin preparing now. Even if the potential refinancing is a few years down the road, the more you prepare now, the better position you put yourself in in the future. The more prepared you are, the easier and more beneficial this process will be.

When getting started, get all of your financial information together. Start to go trough your current budget, and see where your expenses are. You should start by paying down, or off, credit cards and other small lingering debts. If you can, close accounts you do not use, or have paid off. This will give you a better debt to income ratio, and also close some open lines of credit. Your approval rating will increase with less debt, and fewer open accounts. This will also help increase you actual credit rating, which is always good. While having to few open lines of credit can sometimes be a problem, it is much easier to close accounts than to try to get approved for new ones.

If you can, consider taking on another part time job or try to increase your income. Every dollar extra you earn, or have been able to save, will really increase the benefits available to your through refinancing or mortgage modification. The more income you are able to bring, the lower your debt to income ratio will be. This is a key to getting approved for refinancing or modification. It will make you appear as less of a risk to potential mortgage lenders or banks.

One of the last things you should do before contacting potential mortgage lenders or banks is get a copy of your credit report, and carefully review it. Many homeowners have been surprised to find errors or things which should have, but never were, removed from their record. Always get a copy of your rating, and if you find an error, immediately contact the company. Let them know there is a mistake, and be prepared to have evidence. If you have copies of bills, payments, or anything of the like, have them ready so this is an easy process.

Getting prepared to refinance a home loan is the best way all homeowners can ensure they are getting the best deal possible. It will also dramatically increase the chance of getting approved, especially for homeowners with bad credit, mortgage, or financial problems. Take the time, plan ahead, and see good results.

-M Petrone

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