Recently, refinancing has been a trend on the rise. However, many homeowners are unsure where to begin when it comes to refinancing their mortgage. If the refinance process seems confusing to you, then our simple and easy four step guide to refinancing your mortgage can help break this complex process down!
Step 1- Analyze Your Financial Goals
As with any decision, it is important to consider the motive behind the decision. Consider your personal financial goals and if the refinance coincides with them. There are generally FOUR main reasons people refinance – to cut mortgage payments, to pay off the home faster, to tap into their home equity (ex. HELOC), or to quit paying private mortgage insurance. To learn more about what a refinance is and how it works for each motive, click here.
Step 2- Check Your Credit Score
Your credit score and credit history are a big factor in determining the mortgage loan product and interest rate for you. To assure a good interest rate* on your refinance, review your credit score and try to raise it as much as you can.
Step 3- Gather All Application Documents
When you refinance, you are essentially applying for a new home loan. This means you will have to provide documentation to prove your financial status. You can prepare ahead of time by gathering these documents ahead of time. Some common documents needed are your W-2s, tax returns, bank statements, current liabilities, and homeowner’s insurance policy.
Step 4- Closing Day
The last step in the refinance process is to sign the final paperwork to officially receive your new home loan. Be prepared with any needed documentation and the funds to cover any disclosed closing costs. Contact us with any refinance considerations!
*By refinancing your existing loan, total finance charges may be higher over the life of your loan.