Mortgage refinancing for self employed homeowners is not impossible; you will simply need to provide more documentation to the lender. There are a variety of reasons for mortgage refinancing regardless of the economy and mortgage interest rates. Here are several tips to help you decide if mortgage refinancing is right for you.
Convert Your Adjustable Rate Mortgage
Mortgage interest rates have been on the rise in recent years; as a result many homeowners are converting their Adjustable Rate Mortgage (ARM) loans to fixed interest rates. Converting your ARM to a fixed interest rate has the advantage of a predictable mortgage payment that will not change over time. As a self employed homeowner, having regular mortgage payments you can plan your budget around is a definite advantage.
Recouping Your Expenses
Because there are costs involved with mortgage refinancing it is important to determine how much you will save and how long it will take you to recoup the lender fees and closing costs. Generally speaking, the longer you plan on keeping your home, the more sense it makes to refinance your loan. A simple mortgage calculator will help you determine your new payment amount based on the interest rate and term length you choose.
Choosing a Shorter Term Length
As a self employed homeowner your financial objective might be to eliminate your debts as quickly as possible. Mortgage Refinancing with a shorter term length could help you reach this goal. By shortening the term of your new mortgage, 15 years is a popular choice, you will build equity at a much faster rate and qualify for a lower interest rate. Shortening the mortgage term length results in a higher payment amount and you will need to budget accordingly.
Documentation You Need When Mortgage Refinancing
Mortgage lenders tend to require slightly more documentation when approving self employed homeowners. You can save yourself stress and future headache by gathering the necessary documents before applying for a new mortgage. Here is a list to help get you started.
I. Tax Returns for the Last Two Years
II. Your Current Year Profit/Loss Statement
III. Your Homeowners Insurance Policy
IV. Bank Account and Investment Account Statements for the Last Two Years
V. The Payoff Balance and Contact Information for Your Existing Mortgage
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Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing - What You Need to Know, " which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit .
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Mortgage Refinancing Self Employment