The adage “offense is the best defense” can lead to a strategic advantage whether you are buying or refinancing a home. Here are a few tips you may want to consider.
- Get an in-depth preapproval. With a real preapproval, a mortgage lender or bank loan officer will pull your credit report and submit supporting documentation to their automated underwriting system. This allows the bank to give you more accurate terms based on your actual credit score, debt obligations and income, instead of relying on your estimates. It also puts you ahead of the process when you finally go into contract and could help you close faster.
- Round up your paperwork. Gather and keep your financial records in the two months leading up to buying a home – this means pay stubs, checking, saving and investment accounts, tax returns and property tax statements.
- Know your refi magic number. Figure out what mortgage rate you need. It is not an easy number to calculate because you need to look at a host of factors regarding your loan, including what you want to get out of the refinance.
- Maintain your credit profile. In the months leading up to your house purchase, avoid changing your credit obligations, especially between the time of getting pre-approved and the closing of your mortgage. Why? It could hurt your credit score and raise the rate and fees related to the loan or at worst keep you from qualifying altogether.