- Home Refinancing Guide: Steps to Refinance a Mortgage
Home Refinancing Guide: Steps to Refinance a Mortgage
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. Mortgage refinancing to a more favorable term or lower interest rate can save a significant amount 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.
We’re here to make the mortgage refinance process less intimidating and more understandable. 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. At LeBlanc Home Loans, we can help cross off this daunting task from your to-do list.
Steps to Refinancing Your Mortgage
Congratulations! You’ve evaluated your finances and want to make improvements to reach your goals. Before beginning the mortgage refinance process, it is important to do your research. There are many steps involved to make sure you have a smooth and successful experience. Start by pre-qualifying for your home refinance loan. Simply fill out the pre-qualification form online and a licensed loan officer will contact you within 24 hours.
Here are seven steps you need to take to refinance your house:
1. 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.
2. Understand Your Credit Report For Refinance
Your credit score is not the only factor in getting approved for a mortgage refinance, 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 the 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 being accountable for your debts.
3. Meet Your Loan Officer
Give us a call today to discuss your options and get started. Together, we’ll recommend a mortgage product that will meet your needs.
If you want to get an idea of what kind of product may be right for you, then you can view our loan types, which will explain many of our products. But the best thing to do is to speak with one of our licensed loan originators, who will assess your financial situation and make a recommendation.
4. Start the Mortgage Refinance Process
By now, you’ve selected your lender and you’ve gotten preapproved. It is time to start the loan process! Meet with your licensed loan officer to help you gather paperwork and submit your mortgage application.
Gather all the required identification and paperwork:
Identity and Income Information:
- Your full legal name, Social Security number, and date of birth, plus a copy of your Social Security card, which 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.
- Your personal and business federal tax returns for the past three years.
- History Your personal and business federal tax returns for the past three years.annual property taxes, homeowners insurance, and homeowner association dues (if any).
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.
5. Submit Your Application For Mortgage Refinance and Review all Required Documents
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 document to you within three business days of receiving your application.
Clear any additional requests from underwriting
Underwriting is the department that reviews all your identification, paperwork, and credit history to assess 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 to 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 your house, 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, then 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 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.
6. Set Closing Date, Time and Location
Closing on your mortgage refinance usually takes place in the presence of a public notary, and if you have a co-applicant, then 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.
Are You Able and Ready to Refinance?
Whether you’re in need of a lower monthly mortgage, or a fixed interest rate we can help. Finding the right type of loan is the next step. Complete the general statement below with the choice that most closely aligns to your situation.