You are tired of living paycheck to paycheck and struggling to make ends meet. You have read my previous article and acknowledge a mortgage refinance will solve these problems. But what is the first step? What does this process entail and what should you be aware of?

A mortgage refinance is the simple process of rewriting your existing mortgage with additional funds. You can borrow up to 100% of your home’s current market value. These additional funds can then be used to consolidate debt, or any other purpose you deem appropriate, like renovations for example. The new mortgage loan can be repaid over as long as 40 years. This means that your new payments will be manageable. In fact even with the additional money borrowed, your mortgage payments may even end up being lower than they were before.

It is a highly recommended that you get a copy of your personal credit bureau report before you begin shopping for your mortgage refinance. This report is a documented record of your credit worthiness and all borrowers are assigned a score determined by their previous credit behavior. Obtaining and reviewing it ahead of time will give you an idea of how you will be received by potential lenders. Those individuals with low credit scores will have a harder time borrowing money and may have to pay higher mortgage rates than those with better credit scores. While that is not the end of the world in itself, being armed with this information ahead of time will give you an opportunity to prepare responses to potential concerns expressed by lenders. Perhaps there was a strike or you were laid off for a period of time resulting in slow repayment of some of your credit obligations. This is not an uncommon occurrence. By presenting the reasons for a low credit score to the lender, you will assist them in looking upon you more favorably.

Another note on credit reports is that they may contain incorrect information. This could be especially true if you have a common name. Reviewing your credit report will afford you an opportunity to identify any errors before you start your mortgage refinance shopping. For more guidance on shopping for a mortgage while having a bad credit, please refer to my next article. To obtain a copy of your credit bureau report visit www.equifax.com or www.equifax.ca in Canada.

After you have obtained a copy of your credit report (if you choose to do so), the next step is to shop around for the best mortgage rate and lowest fees. This process is not unlike shopping for any other mortgage. Please see my article Save Money; Get the Lowest Mortgage Rate Possible. Again the point to remember is that a mortgage loan, including a mortgage refinance, is just a product. Competition for your mortgage refinance business is fierce and lenders will undercut each other with the mortgage rate and fees to win you over. It is therefore critical to shop around and let lenders know that you are shopping around. This will ensure they cut to the chase and begin by offering you their best rates.

Fees are another area that is open to negotiation. There are a number costs that can be charged when refinancing a mortgage, such as appraisal fees, document fees, title insurance and Private Mortgage Insurance. It is unlikely that all costs can be avoided, but by comparative shopping among lenders you have the greatest opportunity to negotiate the best deal. The fees are usually added on to the amount of the loan so you aren’t forced to come up with them up front. Also, don’t forget all the money that will be saved in reduced interest by consolidating your debts under the mortgage. The fees really are negligible in comparison.

Once you have been approved by a lender, the current market value of your home must be determined by some means. An appraisal report may be ordered from a certified appraiser, or some financial institutions have their own proprietary desktop systems for determining property value. The assessment of the current market value of your home is important because this determines how much you may borrow. Many financial institutions will allow you to borrow up to 100% of this value.

The last step is actually setting up, funding and disbursing the mortgage proceeds. The mortgage payments can be spread over as long as 40 years and some lenders will allow you to commit as much as 45% of your monthly income to payments. This means that there is a mortgage solution that will perfectly fit your financial situation.

After the mortgage is set up and advanced the amount required to payout your existing mortgage and any other loans already secured by the property will be held back. The rest will be available to you to payout credit cards, loans or any other purpose you had previously identified.

Instead of many creditors all taking their own chunk of your paycheck, you now only have one. The mortgage terms have be tailor made for your specific situation and with a little comparative shopping you have secured the lowest mortgage rate and the lowest fees. You now have the freedom to focus on more important things. Congratulations, your life just got simpler, and better.