Start by checking your credit

• To get the best possible mortgage rate, make sure your credit history is healthy and accurate. Aim to raise your credit score above 650 in order to qualify for most prime loans.
• If your credit score is not quite 650, focus your efforts on paying bills on time, reducing your debt balances, avoiding new inquiries and clearing negative inaccuracies from your credit report.
• Make sure the information on your report is correct and fix any problems you discover. Give yourself 30-90 days for correcting inaccuracies. You can learn more online in the Credit Learning Center ( Apply NOW ).
• Found an error while reviewing your credit with the lender? Ask about the "rapid rescoring" process where you can submit a dispute and potentially improve your credit in 72 hours.

Figure out how much you can afford

• The rule of thumb is that most borrowers can afford a home that runs about two-and-one-half times their annual salary.
• Calculate your loan-to-value ratio to see how much you can afford to borrow by dividing the loan amount by the property's value. If your loan-to-value ratio is above 80 percent your rates may increase significantly. Find a less expensive home or save up for a down payment to lower this percentage.
• Calculate your debt-to-income ratio by adding up your monthly debts and dividing by your monthly income. A debt-to-income ratio under 20-39 percent is usually considered good and will help you be perceived as financially stable.
• Don't be afraid to start small. Just because you may qualify for a large loan doesn't mean that it is a smart financial decision to buy as large a home as possible. Take a careful look at your family budget and your housing needs before you decide how much you can really afford.

Be a smart borrower this summer and save thousands by preparing your credit before you apply for a loan. Find out the loan rate you deserve

Refinancing Your Mortgage

Home Mortgage refinancing is a great option for homeowners who have a mortgage that is a couple years old, have built up some equity, but find themselves struggling with a high interest debt. The entire home mortgage refinancing process is basically getting your mortgage company or another lender to pay off your existing loan, and qualify you for another one with a lower interest rate.

Your finances get a second look
Even if you are dealing with your current mortgage lender, you have to fill out some kind of paperwork to let them know that you want to refinance and get everything started. In most cases, the lender will take a second look at your entire financial picture.

You have to provide your payment history, proof of income, list of all outstanding debt, credit report, current loan amount, loan rate and reasons for wanting to refinance your loan. If you have a high interest rate because of past credit problems, you can still qualify for home mortgage refinancing.

Check market index to see if the time is right for refinancing
First, take a quick survey of the home mortgage refinancing market to make sure that the average rates are better than what you currently have on your loan. Call your own lender and look for others online to get preliminary quotes. Then take a second look at your financial picture to see if you really need to go through the home mortgage refinancing process to get the best deal.

Can go from adjustable to fixed rate mortgage
You should consider home mortgage refinancing if you want to change from an adjustable rate mortgage to a fixed rate loan. In this chase, see if you can get at least a two percent different when you go from the old loan to the newer loan. If you have a fixed rate loan and want to get another fixed rate loan, look for at least a one point five percent difference in the rates.

Fees involved
There are always fees associated with refinancing your loan. You might have to pay for new another appraisal, title insurance fees, home inspection, loan origination and associated credit reporting fees.

One quote from current lender to compare against outside quotes
Always try to get at least one of your mortgage refinancing quotes from your current lender. Sometimes, they can waive certain fees or eat the cost because you are long term customer. This does not mean that you should not get quotes from outside sources. They might give you a lower rate and potentially match, or surpass the quote from your previous lender.

In either case, try to maximize your potential savings and minimize the amount of fees and up front costs that are involved in switching