If your current monthly mortgage payments are higher than your income right now, refinancing your home may be the best way to keep you from losing it. However, you must be able to make your new monthly payments without any issues. If you take steps to decrease your expenses, you may be able to refinance your home later. Learn how it may be possible for you to refinance your home below.
What Should You Do Before You Refinance Your Home?
The first thing you may wish to do is create a spreadsheet of your current expenses and income. The spreadsheet can help you cut costs on certain things, such as groceries, utilities, and extracurricular activities. For example, if you're spending too much money on groceries, you may wish to examine your dietary needs or shop at a cheaper store to cut costs.
You also want to minimize or eliminate any credit card expenses you have right now. If you currently keep balances on your cards, they can affect your ability to refinance your home. You can lower your expenses by using less credit during the month or by making extra payments on your cards.
It may take some time for you to lower your monthly expenses. Once your income does exceed your expenses, you can apply for a refinancing home loan.
What Happens Next for You?
Loan providers will generally examine your current income and expenses carefully before they approve your home loan application. You want to be ready for this step of the application process by having current copies of your bank accounts, credit card statements, and savings accounts on hand.
You can also use your spreadsheet to confirm your income exceeds your monthly expenses. If necessary, submit copies of your utility bills, car loan payments, and other expenses along with your home loan refinancing application. You also want to list the contact numbers of each account you submit with your application. Lenders may wish to contact the companies to verify your information.
Lenders may also consider other things prior to refinancing your loan, including the following:
- the current market or interest rates for homeowners and buyers
- the equity in your home and property
- the time, or term limits, of your current home loan
After lenders approve your home refinance application, be sure to go over it thoroughly. You want to ensure the new mortgage rates and payments meet your needs.
If you want to apply for a refinancing home loan program, contact a lender today.