You want to go in for a home mortgage refinance but you’re delaying it because you’ve been told that refinancing is a complicated process? I’ll help you with some simple steps to make your refinance easier.
Get your documents in order
The first thing you need to do is to put together all documents related to your home and existing mortgage. These will include the latest mortgage statement, your annual property tax papers, insurance statement and your credit score information.
Figure out your requirements
Work out the amount you need to borrow and the loan term that suits you. Have a look at your monthly statements to know what you’re paying for interest and principal – the total amount less escrow charges paid for mortgage insurance, home insurance, and tax.
Make sure you’re actually getting yourself into a happier space than before.
Ask for recommendations
Ask family and friends to suggest the names of lenders that they’ve dealt with. You can also go online for fees and rate comparisons, but good services can be better recommended by references. Try to use a mortgage banker offering multiple loan products for a better shopping experience.
Shopping is essential
Shop around. Speak to multiple lenders regarding your finances, your tentative plans, and the rough value of your home. This will help you get information regarding interest rates, available options, other fees, and the services of different lenders.
Consider your current lender
Discuss your refinance plans with your existing lender and find out what he can offer. You’ll still have to go through required formalities, but you’ll find the process simplified and maybe save some money too.
Review application form
To get up to speed with your refi, go through the standard application form you’ll be required to fill. Collect all required information so that you can save time later. The chances of things slowing down by belated requests for additional documents and information are then minimized.
Don’t rush with applying
Even if a lender forces you to, don’t rush into making an application. Once you’ve made a formal application, your lender can make a credit inquiry. Multiple inquiries harm your score and if you have marginal credit, the impact can be worse.
Make a decision
Review your findings, and after sound comparisons, make your decision. When many offers may appear similar, make a decision based on your gut instinct. Rule out lenders you don’t trust or feel pressured by.
Once you’ve made your decision, confirm this to your new lender. Ask about detailed procedures and required documents.
Within three working days of application submission, your lender will give you a statement outlining all associated costs.
Be prepared for surprises
Brace yourself for probable roadblocks. There might be a lower appraisal than you expected and you may not get a loan of the proportions you’d planned. Maybe your credit score is lower than you’d imagined and this might increase mortgage costs.
There might be delays because when rates are lower, lenders get busy and it could sometimes take 2 to 3 months for your mortgage to close.
Lock interest rate
Locking provides protection against rising interest rates. This also means commitment even when rates decline. Try to be efficient and prompt in providing required documentation within the lock period.
Get ready for the closing day, when you assume your new mortgage. You’ll be required to sign lots of legal documents. Be prepared to devote time to reading each document carefully. If you need expert help, it’s worthwhile to hire a lawyer.
The Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm. We can also match you with potential lenders who have products that may help you and provide you with a sense of stability. As an added feature of the Home Loan Advisor service, we provide you with a free home value report generated from Neighborhood IQ