WHY AND HOW TO REFINANCE YOUR MORTGAGE
Are you planning to refinance your mortgage but not sure how to get started? In this article, we will talk about why to refinance your mortgage and how to get started. First, let’s understand the concept of refinance.
In simple terms, to refinance means to revise your current mortgage, wherein your existing mortgage is paid off and is replaced by a new mortgage.
WHY DO YOU NEED TO REFINANCE YOUR MORTGAGE?
There are several reasons to refinance your mortgage right away. Reducing the interest rate and paying off debt, remains the major factor people choose for this program.
- Lower Interest Rates:
Though today’s mortgage rates are historic low, many borrowers pay high-interest rates than the current trend. With Refinancing you can save thousands.
Refinancing into a same mortgage with a low-interest rate is the most common reason borrowers refinance their home mortgage. With a low-interest rate, your monthly payments also lower and the decreases the amount of interest you will pay over life.
- Change in Terms:
One more reason to Refinance your mortgage is the change in terms.
With common mortgage terms being up to 30 years, a shorter duration will lower the interest rate.
With cash-out refinance option, you can take equity out of your home without selling the property. Many people decide to take cash out to pay off the debt, pay for home improvement, purchase another home, and pay utility bills.
HOW TO REFINANCE YOUR MORTGAGE
Here is an overview of the process if you are looking to refinance your mortgage.
The process may vary with the type of program you select. It’s intended to give you a summary of what to anticipate during the loan approval process.
- Determine Your Goals for Refinancing:
Before you plan to refinance your mortgage, it is crucial to consider your goal. Determine whether you want to refinance for lower interest rates, remove mortgage insurance, shorten the term, pay off debt, or take cash out.
- an Appointment:
Once you determine your goal, you need to contact a professional lender to review all the aspects of refinancing application and approval.
- Get a Pre-Approval:
It is always a great idea to get a pre-approval on your loan. This step will save you time and make the process more quickly.
- Prepare Your Application:
After careful consideration and getting a pre-approval, its time to prepare the application.
Once the application is finished, it will be sent to the underwriting department for review and you will be notified once the loan is approved.
Once your loan is approved, it goes to the Closing Department. Closer further reviews the updated closing statement, and the draft are sent to you within a few days for your approval. Generally, you should receive the closing disclosure within 3days as per TRID compliance
Documentation Checklist :
- Driver’s License
- Social Security Card
- Copy of the Note
- Most Recent Mortgage statement
- Owner’s Title Insurance Policy
- Most Recent Paystubs
- Personal Tax Returns
These are the standard checklist to apply for refinancing your mortgage. Additional documents are required, depending on the type of loan you select.