Refinancing your home mortgage loan can lower your interest rate, save you thousands of dollars over the life of the mortgage loan, enable you to access the equity in your home and even shave years off the length of time it will take you to repay your loan.
If you haven’t refinanced before, it can help to understand the steps involved in refinancing a home mortgage:
1. Preparation: Know Your Credit Score
You don’t have to have perfect credit to refinance a home mortgage. However, your credit history and score play a big part in the interest rate you’ll pay for refinancing. Checking your own credit ahead of time can help you identify if it might be advantageous to hold off on refinancing for a few months in order to try to improve your credit score. Checking your credit can also help you identify any errors or inaccuracies in your report and give you a chance to resolve them before applying to refinance.
2. Evaluate Your Loan Options
There are many different refinance loan products available, including cash-out refinance, streamlined refinance, traditional refinance, HARP refinance and other products. Your mortgage professional can help you evaluate all of your options and choose the refinance product that makes the most sense based on your financial situation and goals.
3. Complete a Refinance Loan Application
The next step is to submit a formal loan application. Your mortgage lender will be a helpful resource if you need clarification or have questions about anything in the application process. The documentation you will need to submit to your lender will depend in part on the type of refinance loan product you are applying for. Be prepared to provide documentation including:
- W2 forms
- Personal tax returns
- Statements for bank, investment and retirement accounts
- Information to document any credit you have recently applied for
- Most recent statement for your current mortgage
Your lender will let you know specifically what information they need, which may include some or all of these records and may include additional information.
4. Order Appraisal
An appraisal of your home may or may not be required to establish the value of your home. If it is a requirement, it may help to have completed minor home improvement projects first, as it may raise the appraiser’s determination.
5. Review Approval Documents and Conditions
If your loan application is approved, the mortgage lender will provide a written approval letter and a list of conditions or underwriters’ requirements in order for the loan to be approved. Review this information carefully and make sure you understand and can meet the required terms.
6. Review Loan Documents and Close on the Refinance Application
Your mortgage lender will arrange for the refinance loan closing. You may be asked to sign documents electronically online, or in person through a traditional loan closing process. You should carefully review the loan documents and ask for clarification about anything that isn’t clear.
Once the documents have been signed, your lender will pay off the old mortgage and replace it with your new home mortgage loan.
Refinancing a Home Mortgage? Choose BrightPath!
If you are considering refinancing your home mortgage, the experienced mortgage professionals at BrightPath can help. To learn more, call anytime at 888-222-6003.