Transcript: Questions to ask before refinancing
By Bankrate.com

Voice over: Mortgage rates have hit new lows -- and that sharp decline has spurred a flood of mortgage refinance applications. Depending on the size of the mortgage and reduction in interest rates, a refinancing homeowner could end up slashing payments by $100 or more.

But before you rush out to refinance, take a few minutes to determine if it's the right move for you.

SOT: (Daniel Poulos, President, Elite Lending) "Certainly people who have been in adjustable rate mortgages and have seen their rates dropping over the last six to eight months might be happy where their rate is right now, but they probably need to look ahead and think about refinancing into a fixed rate and knowing they're going to have a low rate for the life of their loan for as long as they choose to stay in there home."

Voice over: The fact is, though; homeowners need two stellar assets these days before they can refinance.

SOT: (Poulos) "The best situation, obviously, is someone who has some equity -- 10 percent down, 20 percent down. They need a good credit score -- you're going to get the best rate if you have a high score… and with a lower score you may still get approved, but you're gonna pay a little bit of a premium in the interest rate."

Voice over: But just because you fit the criteria needed to refinance, it may not make sound financial sense if you don't plan on staying in your home for long.

SOT: (Poulos) "I'm saying it's not a decision some people might make for short-term relief -- to lower their payment anyway, even knowing they may not save all the money back by the time they sell their house -- but it's certainly something you need to balance out. Don't just assume cause you're saving money every month that it's a good deal for you."

Voice over: So, let's review the steps you need to take before refinancing your mortgage loan.

• Check the cost to refinance to see if it's worth your while. Bankrate.com has a mortgage calculator that will help you figure out what your principal and interest payment will be with the new loan.
• Be prepared to address any credit issues that may look negative -- standards have tightened, you'll need a better credit score than in years past.
• Besides abundant equity and a good credit score, lenders will also want you to be able to document your employment, income and assets. Lenders have abandoned the practice of offering loans without verifying this information.

Voice over: While some homeowners won't qualify for the very lowest rates, those who do will see significant savings. Those future savings are likely to end up in the piggy bank. During a particularly tough time in the economy, mproved cash flow could free up money for consumer spending.

Voice over: To crunch some refinancing numbers, visit Bankrate.com's refinancing calculator by clicking the link below.
http://www.bankrate.com/brm/calc_vml/refi/refi.asp