When you are going through the process of home mortgage refinancing there are several major steps to go through. This post includes a complete list of these steps and exactly what goes on at each step.
The initial step in refinancing your home includes giving your info to a lender so that they can get you pre-approved. When this happens the lender will ask for all of your information including your name, address, current mortgage situation, income, social security numbers, and much more. After receiving this information the lender will let you go and he/she get the pre-approval process started.
Basically the lender wants to find out your general situation and also pull your credit score. Once the lender has this information and gets your credit score they will have a good idea of what type of rate/loan they can get you.
From my experience as a mortgage loan officer the best thing to do is follow this process with 3-4 different mortgage companies. I would suggest 3. One bank, one mortgage broker, and one large nationwide company. This allows you to get a hand full of offers and ultimately get the best deal. An easy way to getting multiple quotes is through a company like Lending Tree. When you use Lending Tree they will submit your information to 4 different companies and those companies will get in contact with you about a potential refinance.
This is very important, do not shop around for more than 3-4 quotes as deep as the credit checking process. Getting your credit pulled more than 3-4 times will cause your credit score to go down significantly and in turn you will not get able to get as good of a loan.
Once your lender calls you back with a pre-approval then it is time to talk serious. He should call you back and be able to tell you, what type of rate he can get you. He should also be able to tell you about consolidation or cash out options if you are interested. When refinancing into a new home mortgage it is common for people to take out cash against their homes (home equity loan), or consolidate credit card debit.
Once you get several solid quotes from lenders it is best to write down everything they tell you because often things will suddenly change and you can to make sure you remember what the lender first quoted you for your refinance. After getting these quotes you should select one and move forward with them. When selecting one mortgage lender you should tell the others you have not made a decision yet, just to keep them interested incase the deal goes sour with your first choice.
The next step is to meet with your mortgage loan office of choice and go over the paperwork. This paperwork is non-binding in anyway, don't let your lender fool you otherwise, it just gives them the legal right to get the process started. When going over the loan paperwork it is very important to look at the number of points and the total closing cost they are charging you. Most lenders will stack on a ton of junk fees and try to make tons of money off of you. If a mortgage lender does this your best bet is to tell them the fees are to high and you will have to go somewhere else if they cannot lower them. Usually the lender will lower these for you in this case. Banks are often the best way to go because they rarely try to slap on extra fees.
After signing the initial paperwork for your home mortgage refinance the lender will then get the refinance process started. Despite this happening you are never in a binding situation until you sign the final closing papers. Eventually as the process moves on you will have to get your house appraised. This usually costs about $300 but you should try all costs to get the mortgage company to pay for this upfront and pay them back through the refinance closing. This is to ensure that you are not out $300 if for some reason they cannot get the refinance done for you.
So far this process should have taken about 3 weeks. If it goes over 4 weeks to this point there might be a problem with your loan and you should talk to your refinancing loan officer about it. 4-5 weeks in you should have a closing date set. When you go to the closing you should bring copies of your original mortgage refinance paperwork and make sure none of the numbers have changed. If they have then you should object to signing any paperwork until they switch things back for you. Often times a loan officer will add on junk fees at the last minute and hope you don't notice them.
Once these papers are signed you have about 72 hours to back out of the home mortgage refinance. This could happen if you noticed some change regarding the loan once you got back home.
This basically sums of a home mortgage finance. One last tip though, you should always go for a fixed rate mortgage and make sure 100% that there is no pre-payment penalty. When signing the final paperwork there will be a specific page that talks about a pre-payment penalty if indeed they try to sneak one on you, so watch out for it.
Refinancing a home mortgage can be a long draw out sticky process that is often done by shady people in a shady industry. Your best bet is to stick with banks, not mortgage brokers. I hope this has helped a little bit in your process of refinancing your home mortgage, Good Luck!
Jesse Chettle is a self-made Personal Financial Advising expert who specializes in giving out free Personal Financial Advice over the internet. You can visit my blog Personal Finance to learn more. You can also visit my special mortgage blog at Home Mortgage Refinancing
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