Mortgage Refinancing in Today's Economy

Many people are under the impression it is all but impossible to refinance in today's economy. While it is more difficult in some situations, mortgage refinancing is more than just possible - it remains a viable financial planning tool for millions of households. Here is what you need to keep in mind when trying to refinance your mortgage in today's economy:

1. Better Credit. Tighter lending standards are beginning to take a toll so expect to encounter more stringent criteria in order to obtain the best interest rates. However, with interest rates at historic lows, it is still possible to reduce your monthly obligations with mortgage refinancing even without qualifying for "prime" rates.
   
2. Keep the Paperwork. Not only are banks cracking down on lending standards and requiring better personal documentation in order to obtain a loan, but be prepared to provide documentation for all improvements and upgrades performed on the property.
   
3. Know your Neighbor's Value. You may not be your brother's keeper but for better or worse, your neighbor's property values are likely to impact yours. Because banks and other lenders rely heavily upon comparable values for mortgage refinancing, anything that helps or hurts your local neighborhood or community is likely to help or hurt your property value as well.
   
4. Shop Small. In prior years it was often easier to do business with a big nationwide bank but today all that has changed. With the recent crisis in the financial industry, many small banks and local credit unions are actually easier to deal with for mortgages and mortgage refinancing than their larger counterparts. It still makes sense to comparison shop for a refinance lender before making a final decision since rates and terms may vary.
   
5. Keep an Eye on the Bank. By now it should come as no surprise that banks are in big trouble; fortunately, it doesn't include every bank but it pays to keep an eye on the fiscal health of your banking institution just to make sure your mortgage refinancing doesn't fall through at the last minute. In fact, many homeowners and buyers alike are taking the added precautions of submitting a back-up application when buying or refinancing a loan just to assure they are able to lock-in rates and have access to credit should their existing bank falter. If you aren't convinced about the stability of your banking organization it is often a good idea to verify the fiscal health and stability by visiting the FDIC at www.fdic.gov. They provide a list of bad banks at risk for bankruptcy just for the asking