When you decide to refinance your mortgage, a rate and term refinance 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 considered a refinance on your mortgage before, it can help to understand the steps involved in refinancing a home mortgage:
PREPARATION: KNOW YOUR CREDIT SCORE
You don’t have to have perfect credit to get a rate and term refinance. 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.
EVALUATE YOUR RATE AND TERM REFINANCE MORTGAGE OPTIONS
There are many different refinance loan products available, including cash-out refinance, a refinance mortgage to consolidate debt, FHA streamline refinance, traditional refinance, HARP refinance and other products. Your mortgage lender can help you evaluate all of your options and choose the rate and term refinance product that makes the most sense based on your financial situation and goals.
COMPLETE A REFINANCE LOAN APPLICATION
The next step is to submit a formal rate and term refinance on mortgage 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 rate and term 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.
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.
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 rate and term refinance loan to be approved. Review this information carefully and make sure you understand and can meet the required terms.
REVIEW LOAN DOCUMENTS AND CLOSE ON THE RATE AND TERM 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 BrightPathcan help you find the right rate and term refinance mortgage for you whether you’re looking to refinance your home to pay off debt or looking for a cash out refinance. To learn more, call anytime at 888-222-6003.