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.
We’re here to make the 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 Divito Lending we can help cross this daunting task off your “to-do” list.
Congratulations! You’ve evaluated your finances and want to make improvements to reach your goals. Before beginning the loan 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 refinance loan. Simply fill out the pre-qualification form online and a licensed loan officer will contact you within 24 hours.
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.
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.
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, you can visit 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.
By now, you’ve selected your lender and you’ve gotten pre-approved. It is time to start the loan process! Meet with your licensed loan officer to help you gather paperwork and submit your mortgage application.
Identity & Income Information
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.
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.
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.
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.
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.
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.
Make sure the amount, payments, rate lock, and other details are clearly stated in writing in a signed document.
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:
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 timeframe to review it thoroughly and compare it to your Loan Estimate. Don’t be afraid to ask your lender questions if you are unclear about the terms!
Congratulations, you can cross “refinancing” off your “to-do” list, but more importantly, you’ve either uncovered ways to save, or ways to more easily manage the expenses that life has in store for you, and either way, the financial benefits are well-worth the effort.
Divito Lending is here to offer you guidance on any future questions or situations that may arise with your loan. A licensed loan officer will always be available to help you refinance, use your home equity, or even purchase additional properties to build your investment portfolio.
Now that you understand the process that will take place, take the time to understand other benefits and aspects of refinancing. Check out these helpful links to learn more about the resources available to help guide you throughout the loan process.
Learn about the benefits of refinancing your existing mortgage.
Learn common mortgage terms that will be relevant to your home buying experience.
Consider the most frequently asked questions that our clients ask when refinancing their mortgage.
Refinancing to Pay Down Debt
Check out these specific points about applying your home equity toward debt consolidation.
Refinancing to Protect Home Equity
Check out these specific points about refinancing in order to protect your home equity.
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.