Top 10 tips for finding a home loan refinance

Finding it hard to resist mortgage interest rates below 5%? You're not alone if you want a home loan refinance. Here are the top 10 tips to making sure your home loan refinance experience goes smoothly.

Home Loan Refinance Tip #1: Figure out how much equity you have. Get your property's value assessed and find out from your Realtor what the comps in your area are selling for as opposed to what they're listed for. Does your neighborhood have a lot of foreclosures? If so, expect your home value to have dropped in price, which can affect your home loan refinance. Most lenders today won't do a home loan refinance unless you have at least 20% equity and have proof of income.

Home Loan Refinance Tip #2: Make sure your credit score and income qualifies you. Because of the housing crisis fallout, lenders have stricter credit and income requirements. Get your credit and debt-to-income ratio in order before even beginning to think about entering the home loan refinance process.

Home Loan Refinance Tip #3:
Prioritize your home loan refinance goals. Whether you want to lower your monthly payments or reduce your loan term, figure that out first to make sure you meet those goals with your home loan refinance.

Home Loan Refinance Tip #4: Don't assume you can't get a home loan refinance if you are under water with your mortgage. Even if your property's value is less than what you owe on it, it is still possible to get a home loan refinance. If you have a mortgage that is owned or securitized by Fannie Mae or Freddie Mac, you might still be able to qualify. Some federal programs even allow you to get a home loan refinance if your mortgage is 125% of your home's value.

Home Loan Refinance Tip #5: Don't assume you can't get a home loan refinance if you are unemployed. Many are finding themselves in the position where they can't qualify for a home loan refinance because they don't have a full-time job, but because they don't have a full-time job, they need a home loan refinance. If you can relate, no documentation loans are one option. WalletPop has written about how to manage the home loan refinance question as an unemployed person here.

Home Loan Refinance Tip #6: Don't take the first home loan refinance you see. Shop for the best home loan refinance deal, since home loan refinance fees vary widely. Shop around for lenders, asking what home loan refinance fees and rates each offers.

Home Loan Refinance Tip #7: Check out your credit union for a home loan refinance. Nonprofit credit unions often charge lower interest rates and fees than traditional banks.

Home Loan Refinance Tip #8
: Find out whether your existing mortgage involves a prepayment penalty if you get a home loan refinance. If you do have to pay fees that equal the amount you'd save from a home loan refinance, then obviously, it doesn't make sense to proceed.

Home Loan Refinance Tip #9
: Be careful about getting a home loan refinance to pay off debts or to make purchases. We've all seen the aftermath of the home-loan-refinance-as-ATM mentality, so think twice about whether your motivations for getting a home loan refinance are reasonable. You don't want to use a home loan refinance to consolidate debts so you can afford your dream vacation or dream car, but you can, with caution, make an argument for using a home loan refinance to make home improvements, if those renovations or remodeling projects will give you a bigger return on your investment than what they cost.

Home Loan Refinance Tip #10
: Be patient. Due to the home loan refinance requests spurred by the low interest rates, some lenders may take 90 days or more to process a home loan refinance.
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