Refinancing Guide
Refinancing your home may not be your favorite thing on your “to-do” list to tackle, but the fact is that it may be the most impactful. Refinancing to a more favorable term or lower interest rate can save significant amounts of money over the life of your loan. Or, changing your financing can free up the cash you may need in pressing situations, like renovations, college tuition or unplanned home repairs.
Even if you’ve been through the mortgage process before, you may not be aware of all of the specialized mortgage products and options that can be tailored to help you to either save money or gain access to funds at lower interest rates than the average credit card. We can help cross this daunting task off your “to-do” list.
Steps to Refinancing Your Mortgage
So you’ve evaluated your finances and want to make improvements to reach your goals. Start by pre-qualifying for your refinance loan.
Pre-Qualify
What is pre-qualification?
Pre-qualification determines your ability to repay a refinance loan based on information you provide. Your assets and income are reviewed to establish the maximum loan amount you can afford and how much you may be able to borrow.
Understand Your Credit Report For Refi
Your credit score is not the only factor in getting approved for a mortgage, but it is an important part of determining what you will be able to qualify for.
Check your own credit score before meeting with a lender.
It is important to make sure that your score is accurate when applying for a loan. You can get a free credit report once a year online by visiting annualcreditreport.com.
Verify report for accurate information.
Report and dispute inaccuracies with the credit bureau. Disputes in process may delay loan approval.
Paying down high credit balances may positively affect your credit score.
By paying down applicable lines of credit before applying for a loan, you may qualify for getting approved for a better interest rate.
Set up payment plans.
Call your creditors and work out a budget-friendly payment plan on delinquent accounts prior to applying for a loan. Work out a plan that won’t harshly affect your debt-to-income ratio but will still let lenders know you are serious about be credible for your debts.
Meet with us
If you want to get an idea of what kind of product may be right for you, you can visit our loan types, which will explain many of our products. But the best thing to do is to speak with can us so we help you on your way.
Start The Refi Process
It’s time to start the loan process. We will help you gather all of the necessary paperwork to expedite the process and communicate any additional needs.
Gather all necessary identification and paperwork
Identity & Income Information
Your full legal name, Social Security number, and date of birth. A copy of your Social Security card may be required.
Your phone number, email address, and residential mailing addresses for the past two years.
Your primary and secondary income and sources.
Your government-issued photo ID.
All employer names, addresses, and phone numbers for the past two years.
The values of your bank, investment, and retirement accounts, as well as any other asset accounts.
Your monthly debt obligations.
The address of the mortgaged property, year built, estimated home equity amount, and home value.
History of annual property taxes, homeowners insurance, and homeowner association dues (if any).
Income Information for Self-Employed Borrowers
Your personal and business federal tax returns for the past three years.
A year-to-date profit and loss statement.
A complete list of all business debts.
Credit Information
A letter of explanation for any late payments, judgments, collections, or other derogatory credit history items.
Source of funds documentation for any large deposits on asset or bank statements.
The judicial decree or court order of each obligation due to legal action.
Bankruptcy/discharge papers for all bankruptcies in your credit history.
Payment histories for utilities, cable TV, internet, phone, auto insurance, and any other expenses.
Income & Tax Documentation
IRS Form 4506-T — request for tax transcript; must be completed, signed, and dated.
Your W-2s for the past two years.
Pay stubs for the past 30 days.
Your federal tax returns (1040s) for the past two years.
Your most recent two months’ asset and bank statements for all accounts on your application (all pages, including blank pages).
A written explanation if you have been employed less than two years or if employment gaps exist.
A purchase contract signed by all parties.
Homeowners insurance information, including the agent’s name and phone number.
Some “streamline” refinance loan products, like FHA Streamline Refinance Loans or VA Interest Rate Reduction Refinance Loans, may not require all of this paperwork. And in other cases, this list may not be all-inclusive, but you may be able to expedite the process by having these documents on hand.
Submit your application
Fill out and sign the loan application — including the attached fair lending notice, loan info sheet, and credit authorization. Note: Do not use whiteout on this paperwork. Mistakes should be crossed out and initialed.
Review your Loan Estimate
This document contains important details about the loan you are applying for including estimations of your interest rate, monthly payment, closing costs, taxes, insurance and any prepayment penalties. The lender must provide this to you within three business days of receiving your application.
Review your Good Faith Estimate
This is the list of the settlement charges that you must pay at closing. The lender must provide this to you within three business days of receiving the mortgage application.
Clear any additional requests from underwriting
Underwriting is the department that reviews all of your identification, paperwork, and credit history to asses if you will qualify for the desired loan. They determine the terms of the loan and will occasionally require extra documents to fully understand your background and make their decision. It is important to make yourself available during the underwriting process and to respond to any requests promptly and thoroughly.
Consider The Home Appraisal
When refinancing, not everyone is required to get a home appraisal. For example, if a person has an FHA loan, and wants to refinance into another FHA loan for the purpose of lowering monthly payments, a home appraisal won’t be required as long as previous mortgage payments were all made on time. However, it could be in your best interest to get a home appraisal for your refinance, because the risk is that the lender doesn’t assign a high enough value to your home, thereby restricting the type of mortgage products that may be available to you. An accurate appraisal will prevent the lender from basing the refinance loan on too small of a home value.
Take the time to get commitments in writing.
Make sure the amount, payments, rate lock, and other details are clearly stated in writing in a signed document.
Set Closing Date, Time and Location
Closing usually takes place in the presence of a public notary, and if you have a co-applicant, they will also need to be present.
You should be prepared for several things:
Review the final documents. Make sure the rates and amounts are what you have agreed to.
Bring a cashier’s check to cover the closing costs and down payment. Personal checks are usually not accepted.
Sign the loan and be prepared to show photo ID and possibly a Social Security card.
Review your closing disclosure
The lender must provide this to you at least three business days before you close your loan. This document contains the final terms of your loan. Use this time frame to review it thoroughly and compare it to your Loan Estimate. Don’t be afraid to ask questions if you are unclear about the terms.
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