Thinking about refinancing? You’re not alone.

By Elrico Hurley

Were you a last minute tax filer because you owed more money to the federal or state government, and you just do not have it to give?  If so don’t worry; you have company.  Millions of Americans are struggling to make ends meet.  Many are making the tough choice of which bills to pay or not between food on the table, medicine, utilities, and a mortgage/rent payment.  If you own a home, you have options.  One could be to refinance your home. 

Your home is your most prized and personal investment.  Once you purchased your home, you began building equity.  Equity is like a piggy bank being held by your mortgage company. There are many programs that could benefit your situation such as debt consolidation, home repair/construction loans, cash out.  Consult with a bank loan officer or a mortgage brokerage to determine which financial options are right for you.

How do you know if you should work with a bank or a mortgage firm?  If you have a checking or savings account with a bank or credit union it would seem that that institution would be the most natural choice for you.  It may or may not be the best place for your investment however.  They may not extend credit to you based on your credit score (most lenders require a 600 FICO or credit score); or you are self-employed; your debt ratio is more than 35 cents on the dollar; or the amount that you want to borrow is less or more than their loan amount range.  Brokers have many more banks or other options to choose from, and some have programs for those who the more traditional lenders will not lend to.

A major concern to most homeowners is “what will my interest rate be?”  There are many factors that go into determining the interest rate for your loan.  Your credit score and property value are the two highest factors.  Other factors can include: your loan-to-value (how much are you borrowing divided by the value of the property), are you receiving cash back or consolidating debts, are you receiving a fixed rate vs. an Adjustable Rate Mortgage (ARM), the YSP to the broker or lender, and/or are you proving your income (full doc) or relying on your credit score and property value (stated).

The time it takes to refinance your property depends on both the homeowner and the lender.  The quicker the homeowner provides the necessary information to the loan officer, the sooner the lender can put it in underwriting.  Typically to start you would need to provide basic credit, employment, mortgage, property tax/insurance and other financial information.  You can speed the process by having readily available W-2 statements for the last two years or tax returns, your last paystub(s) showing a minimum of the last 30 days, bank statements for the last 12 months, the name and phone number of your insurance agent, bankruptcy and/or divorce decrees (if applicable) and your latest mortgage statement.   Once the lender has all the information it needs, they review it for a short period of time and will determine if they will proceed with the loan.

Refinancing can be a viable option to lower monthly payments, receive a lump sum amount, reduce or eliminate debt before filing for bankruptcy.  Be sure to talk with your mortgage advisor to determine the best option for your situation. 

Elrico Hurley is an Account Executive/Loan Officer at American Mortgage Professionals.  He specializes in FHA and debt consolidation loans, as well as residential, investment and commercial real estate purchases and refinances.  He may be reached at: 517-333-3500 or 877-313-3500 or by e-mail at:  American Mortgage Professionals is located at 5030 Northwind Drive, Ste. 101, East Lansing, MI.