There are a ton of reasons to refinance your mortgage, from wanting to lower your monthly payment to paying off credit cards or shortening the length of your mortgage. A mortgage refinance is a fresh start on what you still owe, where you can take today’s more favorable rates and rising home values and get a better loan for your needs. A lot of people want to know how to get their refinance. What are the steps to refinance your mortgage?
Step 1 – Get Ready
Before you get started down the road to a refinance, you can follow a few steps to make sure that the process goes smoothly. You should always start by checking your credit report and credit score, and by making sure that there are no irregularities or issues that you can clean up. If you spot false information on your report that is lowering your score, get your dispute out there now, as it can take 60 days to close the report, and many lenders won’t even begin the process of checking your credit while there is an open dispute on your credit.
It’s also really important to get your documents and paperwork straight before you get into the process. We will request a bunch of papers, and the faster you can get them into our hands, the faster we can close your refinance and save you money. Having your financial information ready is the best way to make sure your loan application goes quickly. This is a non-exhaustive list, but you should gather up the following items:
- Most current paystub showing at least 30 days of year to date income
- Past two years’ W2s
- Two years of personal tax returns
- Bank, investment or retirement account statements covering the past two months (all pages)
- Current homeowners insurance declaration page
- Most recent mortgage statement
- If ever divorced, a complete divorce decree and separation agreement
- If ever declared bankrupt, complete bankruptcy papers
- Credit explanation letter for any recent or significant derogatory credit issues
- Inquiry explanation letter if you’ve applied for any forms of credit in the past 90 days
- List of questions regarding mortgage product and programs for loan agent
Step 2 – Get Yourself Into the Right Mortgage
If you answer these questions, you can determine (with our help) which mortgage you need to apply for.
- What are your goals for this refinance, and what would you like to accomplish?
- How far into your current mortgage are you?
- How many years do you plan to stay?
- Do you know the difference between, FHA, Conventional, HARP, VA, etc loans?
- What is your current mortgage rate and payment?
Step 3 – Get Your Application In
So, you know what mortgage you want and you have all of your paperwork – it’s time to apply! Make sure that when you put in your application that all of your information is as accurate as possible and matches the paperwork that you are turning in. Mistakes happen, but when you are applying for the largest purchase of your life, you want to be extra careful and make sure that you have it exactly right.
Small mistakes can make it seem like you are hiding things from the lender, and that can delay or imperil your loan application at the underwriting stage. You should also call your loan agent at this time to make sure that you have given them everything that they need.
Step 4 – Appraisal
Once your application and documentation has been cleared, it’s time to order that appraisal. This is to establish the value of the property for the loan, and to see if your equity is there to support doing the loan. This cost is $300-$400, and is usually paid for by the homeowner, although we pay for VA Loan appraisals through our Hero.Loan program.
Think of this as a job interview for your house. You want it to look as nice as possible, so get the place cleaned up and fix any small problems that you have lingering before you have the appraiser come over. Since the appraiser will want to see every part of the house, you need to make sure that everything is in top shape. The appraiser’s opinion of the value of the property reflects how much your loan will be for, so make sure it’s as high as possible.
Step 5 – Time for Underwriting
Where many mortgage companies send these off to banks for underwriters to review, we are actually a mortgage bank that underwrites our own loans, and we make these credit decisions. This lets us save you time during the process. Our underwriter will look carefully at all of the documents that you gave us to see whether or not you can make the payments on this loan. During this step, you may have to provide more documentation that had not been requested during the first round of the process.
Step 6 – Make sure the loan is right for you
Once our underwriter has determined that they are satisfied with your loan application, then they will send out an approval letter that lists out the terms of the loan that you have been approved for and all of the conditions that you still need to satisfy, including additional paperwork and information. You need to inspect this letter carefully, and we will go over all of it with you either in the office or at your home or work to make sure you understand every piece. Make sure that this is the loan that you are signing up for!
Step 7 – Rate Lock
At this point, if you are satisfied with all of the conditions and the loan approval, we will ask you if you are ready to lock in your refinance mortgage rate. This lock will save you if the rates suddenly jump, which is not unheard of when rates are this low. These rate locks are generally for a specific period of time, and can last anywhere from 7 to 60 days. You should try to find out how long it will take to close the loan, (we usually close in 30 days or so, but it can take longer if you don’t get paperwork back to us) and factor that in to how long to lock your rate for. We will help you determine it, and work with you to make sure that you get the rate that you want and close during the lock period.
Step 8 – Order Mortgage Documents
Now we’re in the home stretch. Your documents have been reviewed and accepted by the underwriter and you have a locked rate, and it’s time to order your mortgage loan documents for your mortgage refinance. We will give you a preliminary closing statement showing you all of the closing costs and giving you an overview of the terms of the mortgage. You must review everything carefully here, and we’ll go over it as many times as it takes to make you comfortable. If you have any questions about the mortgage, you need to get them out there now, so you can have them resolved before you sit down at the closing table. If you are comfortable with the preliminary closing statement, you set a signing date and order the documents.
Step 9 – Sign On the Dotted Line
Time to sign. Finally! We will confirm where and when you need to be there for the signing. When you are at the closing table, you’ll need your ID, so bring your driver’s license, state identification or passport with you. You’ll also have to sign a LOT of documents, so block off a good amount of time so you can review every document carefully and not feel pressed for time. You usually sign with a notary or an attorney, and they will go over the documents and answer any questions that you have. Make sure you sign each document with the same signature, and make them consistent.
Step 10 – Close That Mortgage
After the 3-Day cancellation period expires, where you can still walk away from the deal, your lender will fund your loan and the closing agent will send the funds that pay off your current loan. Once the funds have been disbursed, you are closed and the closing agent will send over your new mortgage or deed to record against your property. You will then receive a new HUD-1 form in a few days, and that is your official closing statement. Keep this HUD-1 along with all of your loan documents for taxes and future reference.
Call The Home Loan Expert Team in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515, Nashville at (615) 810-8555 or Birmingham, AL at (205)721-7656. You can always apply online at hero.loan for your VA Loan, and www.thehomeloanexpert.com for your other mortgage needs, and we’re also open on Saturdays and will come to you to help close your loan. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?