Preparing for a refinance closing is similar to preparing for the closing on the sale of a house. Once your lender approves your mortgage refinance, you need to pick a date for closing. Before you reach that point, however, there are certain things you need to do. Smart loan shoppers plan ahead for obstacles that can get in the way, saving themselves time, money and stress.
Get It in Writing
Ask your lender for a list of the actual closing costs from the start. The Federal Reserve Board suggests that you get all loan details in writing. If you settle for an estimate, unexpected costs could crop up between the time you fill out your loan application and the final closing date, costing you lots more money. Disclosure statements aside, you might save some cash by negotiating a guaranteed amount of closing costs that you are responsible for paying. Get everything clearly in writing so that the lender can’t charge you additional fees at the end.
Lock in your interest rate for an additional week or two longer than you think it will take to close. This protects you from losing a low locked rate in case an emergency crops up that postpones closing. An increase in the loan rate could be enough so that you can no longer afford to refinance your loan. On the other hand, locking in a rate for too long can cost you, too. You may end up paying a higher interest rate if loan rates drop even lower in the interim. The trick is to lock in your rate for a little past the time you plan to close. According to MortgageLoan.com, if you’re scheduled to close on your refinance loan within 30 days, give yourself some extra time by locking in your rate for 45 days.
Negotiate Out-of-Pocket Closing Costs
Even after you figure out how much money you will need to close, give yourself some leeway. Prepare to take enough funds with you to closing so that you don’t run into delays. In fact, don’t be afraid to negotiate with your lender to reduce or waive some of the closing fees. Dorothy Rosen, a certified public accountant and Bankrate.com adviser, recommends that you start by negotiating application, document preparation and loan-processing fees. These fees are often the easiest to negotiate because they are for paperwork at the lender’s end. You may even be able to negotiate down fees the lender must reimburse third parties for their services. Ask what every fee is for and use your high credit score as clout to negotiate lower closing cost fees.
Go to Closing Prepared
The best way to prevent problems and delays at closing is to go in prepared. Sit down with your closing agent before the date of closing to review all the details. It can save everyone time when you know what to expect in advance. Ask questions about anything you don't understand so that you can head off any potential problems. To pay off existing loans at closing, provide the closing agent with the lender’s name and customer service number. You must also give the loan number for the loan you are paying off. Bring a cashier’s check to pay any closing fees. If the names of both you and your spouse appear on the new loan documents, each of you must bring a valid photo I.D. to prove you are who you say you are.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.