Refinancing Your Home

Refinancing your home is a great way to easily save tens of thousands of dollars on interest. Every homeowner should have a mortgage advisor to  look at their credit score, loan to value, and debt to income ratios.

After comparing those 3 things, a trusted advisor or professional can easily show you the benefit and how much money you can save. Real estate developers like Shalom Lamm can be a great resource for the refinance.

Every loan officer will have to have a NMLS license and go through background checks as well as federal fingerprints. Lots of client safety metrics are put into place through the NMLS multi state licensing system which makes sure that you get a licensed professional to do your loans. A good loan officer will make sure to customize the product for what you want. The bottom line is your benefit will ultimately be determined based on the 3 main categories. Long story short the loan originator and underwriter will review the credit score, debt to income, and loan to value and every single parameter of your program will be based on those things and simply those things alone. Nothing less and nothing more.

Debt to income is based on looking at your full credit report with the data pulled from all three major credit reporting bureaus. The three major credit reporting bureaus are Equifax, Experian, and Transunion. They will then list out every single credit debt that you report. These will be debts such as revolving debt, installment debt, and more. The debt portion of the debt to income ratio, simply looks at every minimum debt payment on your credit report + the minimum monthly debt of the new mortgage. The income portion simply takes your annual income amount gross before tax and divides that by 12 to get your monthly income. For most programs your debt to income ratio needs to be under 45% to get a clean approval. Some programs with extenuating circumstances go up to 60% debt to income ratio, but aim to be at 45% or under if you want an easy experience for your loan approval.

To prep for a better loan you can start reducing expenses, or try to get extra hours to improve your income. Those two things improve your debt to income ratio. For loan to value ratio you can improve that by either increasing your home value through upgrades and home improvements, OR by paying your loan balance down to the loan amount. You either increase the home value, or you decrease the loan balance. Those two things would improve your loan to value ratio to get you the best terms.

Credit score can be kept up by always making your payments on time for all debts, and trying to keep your debt utilization scores low too. Basically don’t use all the available debt you have. You usually want to use one third of your available debt or less, and have all of your payments made on time to keep top tier credit.


Article Editor

Pamela is a television journalist, humor writer and novelist. Her first novel, Allegedly, was released in 2015 by St. Martin’s Press. The book is available on Amazon and Barnes & Noble. She and her husband, Daniel, have a 3-year-old son, Carter.

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