There are several important steps pursuant to loan refinance options, all of which help borrowers best experience the many benefits a proper refinance provides. Home mortgage and personal loans are both able to be refinanced. The benefits for each are mostly similar albeit with a few notable differences.
Loan refinance borrowers and lenders both have important steps in the refinancing process. The best companies also offer the best rates and terms. Read ahead for tips on loan refinance strategies and benefits.
Refinancing a loan involves several important steps taken by both the borrower and lender. As a borrower the first important step is to have full knowledge of your credit rating and FICO score. A FICO score is a three-digit number used to indicate your cumulative and overall creditworthiness to potential lenders.
Checking your FICO score is both reliable and free when using the AnnualCreditReport.com website.
AnnualCreditReport.com provides information from all three major credit reporting agencies at no charge, once a year. When used as directed the service provides information reported from Equifax, Experian and TransUnion without reducing your credit score. All three major reporting agencies prioritize your account history and information differently.
Lenders will frequently pull a FICO score from all three agencies, but occasionally only pull from one. Knowing your current credit standing with all three bureaus helps determine the target interest rates approved for your refinance loan. It also helps determine what amount of minimum payments are affordable and within your budget.
While doing comparison-shopping between lenders it is a good idea to also gather all required documents necessary to complete your loan process. Required documents include proof of income, your two most recent years of tax records, bank statements, mortgage statements, proof of homeowners insurance and more.
After choosing a lender the next step is to complete and submit your application. Once approved, your final step is to schedule an appraisal to verify the value of your home. When refinancing a personal loan where a home is not involved, appraisals are consequently not required.