When mortgage interest rates drop low enough, homeowners can save hundreds of dollars on their monthly payments by refinancing with their mortgage holders. When rates decrease, many lenders offer easy refinance solutions. Some refinance programs don't require appraisals or upfront fees, making it easy and inexpensive to get started. By staying with your existing mortgage holder, the process should be faster and easier because the company has your loan information and is familiar with your payment history. A refinance is still a new loan, so the company will need updated financial information to determine if you qualify.
Review your tax returns, W-2s and pay stubs to familiarize yourself with your current and historic gross income. The mortgage company will want to know what your gross income is rather than your net or take-home pay. Check your bank statements to find out what your current balance is. You will need this for the application process.
Call your existing mortgage holder and speak with a loan representative. Tell the representative you want to refinance, and ask what your loan options are. If you are more comfortable, do this in person at a lending office. Some lenders also offer online applications.
Complete the refinance application by answering the questions, referring to the information you have gathered. Be as accurate as possible because the lender will review your documents during the underwriting process. Once done, sign and return the application. For expedited processing, include your income documents, bank statements, home owner's insurance policy, employer contact and current loan statement.
Allow the lender to run your credit. Based on that information, he will provide you with a rate quote and good faith estimate. The GFE will list out your interest rate, annual percentage rate, loan amount, lender fees, third-party fees and any discount fees.
Review the Good Faith Estimate to make sure you are receiving the interest rate you wanted and are comfortable with the fees being charged. If you are comparing loan options from more than one lender, compare the GFEs against each other rather than verbal quotes.
Sign and return the GFE to the lender if you are satisfied with the information on the GFE. Confirm with your lender that your interest rate is locked and ask when the rate lock expires. This determines how quickly the loan needs to close to meet the terms listed on the GFE.
Respond promptly to request for additional documentation. During the underwriting process, lenders will frequently have questions and request further paperwork. A delayed response can cause your interest rate lock to expire.
Coordinate an appraisal time with the lender. Clean your home and yard in advance. Pictures will be taken and used in the report. If a home appears to be in disrepair, it can negatively affect its value. Once the appraisal is complete, the lender will review the value to ensure you meet loan-to-value guidelines.
Sign the loan documents when your lender sends them to you. Signing will typically be done at an escrow company or your lender's office. Loans done remotely require a notary, which can be found at your bank. Refinance loans have a three day right of rescission period that must pass before your loan closing. If you change your mind before the three days are up, you can send the lender written instructions to cancel your loan.
Review the new loan number and payment instructions your lender provides once your loan has closed. Confirm that your payment is due on the same day and when your first payment is due. There might be a delay in getting the information to you, so call the customer service department after your loan has closed and get the information immediately.
Items you will need
- Two years tax returns
- Two years W-2s
- Two most recent pay stubs
- Two months of recent bank statements
- Home owners insurance policy
- Employment information for past two years
- Current loan number
- Be prompt when applying for and completing the refinance of your home. Loan programs and interest rates are subject to change, and delays can cause you to pay more money. For the 45 days you are working with your mortgage lender, speak with a representative on a weekly basis to see if you need to provide anything more. This ensures you are staying on top of the process and benefit from the lower interest rate for which you are applying.
- Provide accurate information, or your refinance could be denied.
- Move extra cars out of the driveway before the appraiser arrives. Having multiple cars that do not run can be considered an environmental hazard. Extra garbage can also be considered a hazard.
- Take down any signage from a home business. Even if you are a Mary Kay agent, your home should look like a home rather than a business.
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