Mortgage-refinance wave

WASHINGTON -- An expected wave of refinancings failed to materialize earlier this year. But in anticipation of further rate cuts by the Federal Reserve Board, lenders are girding for a mini-boom in the coming weeks. Are you ready? Qualifying for a mortgage won't be as easy as it was just a year or two ago. Now, lenders are being far more picky.Keeping in mind that you may need to move quickly, now is the time to obtain copies of your credit report from the three major credit repositories -- TransUnion, Equifax and Experian. You are entitled to a free credit report once a year from each agency. Go to www.annualcreditreport.com or call (877) 322-8228.Don't worry that the three reports don't match. The repositories take information from different trade lines. It's more important to scour the reports for errors or damaging information and get them corrected or removed. Doing so "will have an immediate and positive effect" on your credit score, said Bruce Brown, president of First Security Mortgage Co. in Kansas City, Mo., and a certified mortgage-planning specialist. You'll need documentation of wages, savings and other assets. To prove earnings, you'll need your last three pay stubs. If you are self-employed, the lender will want to see signed copies of your last two tax returns and a current profit-and-loss statement. Also have at the ready the last two years' tax returns for your business.You'll need some cash too. You'll probably be paying discount points, origination fees and other costs.Some charges may be lower than the last time around. Title-insurance policies, for example, are often priced up to 70% lower when the same company that wrote the original policy reissues them.You should receive an estimate of your closing costs when you apply for your new loan. But remember, these figures are subject to change, so be prepared to pay more. If you are short on funds, though, you may be able to roll the charges into the loan.Determine whether your old loan has a prepayment penalty. If it does, you can pay it from the equity you have in the house. But if it's been only a year or two since you took out the current loan, you may not have enough equity to cover the penalty. In that case, you either have to pay the fee or add it to the new loan's balance.You'll also need to show that you have enough money in your savings account to cover at least two monthly payments.The lender will want a list of current debts, including mortgages on your other real property, car loans and credit-card accounts, with account numbers, plus a list of your checking and savings accounts with the account numbers.Lenders have become very concerned about fraud, so you'll have to prove you are who you say you are. To do that, you'll need a photo ID and a copy of your Social Security card. If you are a foreign national, you'll have to prove you are in the United States legally.Another issue for lenders is proof positive that the house is worth what you say it is. You can help yourself by finding properties like yours that have sold within the last six months. The properties must be comparable -- in the same or a nearby neighborhood, the same number of bedrooms and bathrooms, and so on.You might come up with the same properties as the lender's appraiser. But you might find different ones, and you need to be armed and ready if the value of properties the appraiser uses are not as great as the ones you have uncovered. Once you have your package together, get it to a mortgage broker who can send it to a lender at a moment's notice."The market is so volatile today that we've seen rate swings of three-eighths to a half a point in a single day," said Brown of First Security Mortgage. "We've had instances where we called a client at 9 a.m. with a favorable rate that was gone when he called back two hours later."Your best bet, of course, is to start with your current lender. Often, your lender will offer a discount if you stay.