There are many advantages to refinancing your mortgage. When you refinance your mortgage you can lower your interest rate, lower your monthly payment amount, and even cash out equity in your home, provided the lender approves your application. If your credit score is too low or your debts too high, mortgage lenders could decide you are too much of a risk for lending. Here is what you need to make sure your mortgage refinancing application is approved.

The process of refinancing your home will go more smoothly if you take to time to do your homework and prepare your finances prior to applying. Before you start applying for a new mortgage, take the time to review your credit and your income.

Review Your Credit

Prior to applying to refinance your mortgage you need to request copies of your credit reports from the three credit agencies and review them for errors. If you find errors in your credit reports you need to dispute them with the individual credit agency and your creditor that made the error. Your credit score is based on the contents of your credit records; it is important that these records are accurate prior to applying to refinance your mortgage. The interest rate you will receive on your new mortgage is directly related to your credit score.

Document Your Income

Applying to refinance your mortgage is no different than applying for your original mortgage. Your lender is going to want proof of your income and assets. You can document your income with pay stubs, bank statements, and tax returns. You will want to provide documentation of your income going back two years. There are loans for homeowners that have problems documenting income; however, these no-doc mortgages come at a high premium and require excellent credit.

Your Interest Rate

The interest rate you qualify for is based on your credit. If your credit score is poor you can still refinance your mortgage, it will just cost you more. There are steps you can take to improve your credit prior to applying. A large part of your credit score is based on your payment history. If you have late payments on your record it will damage your credit score. Before you apply for a new mortgage makes sure you have at least six months of on time payments on your credit history. To learn more about refinancing your mortgage and avoiding common mistakes that can cost you thousands, register for a free mortgage guidebook using the links below.

Louie Latour

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of ?Five Things You Need to Know before Refinancing Your Mortgage,? which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit RefiAdvisor.com.