Step-by-Step Refinancing Checklist
This step-by-step refinancing checklist will help you get ready to refinance your home and navigate the refinancing process.
Step 1: Scope out Your Situation
Before you begin the steps to refinancing, ask yourself these questions to see if refinancing might be an option for you:
· How long do I plan to stay in my current home?
· How much do I owe on my current home?
· Have interest rates gone down since I bought my home, and if so, by how much?
· How much can I afford to pay any costs?
· Why do I want to refinance?
Our Refinance Comparison Calculator can help you find out if refinancing your home might be an option for you and how much you may be able to save by refinancing.
Step 2: Gather Paperwork
Lenders will want to know about you and what you earn, what you own, what you owe, and where you live. Required information may include the following items:
About You
· Driver's License or other ID
· Security Number
What You Earn
· Pay stubs for the last month
· Tax returns for the last two (2) years
What You Own
· Checking and savings account statements
· Investment account (stocks, bonds, mutual funds) statements
· Retirement account (IRA, 401k or 403b) statements
What You Owe
· Information about other debts (car loans, student loans, or credit cards, for example)
· Information about alimony or child support
Where You Live
· Paperwork for your current mortgage
· A copy of your current homeowner's insurance policy
· A copy of your title insurance (a document with information about your home, such as taxes, your home's location, and whose names are on the title, for example)
Some lenders may need other documents in addition to the ones listed here. Ask lenders for more details about the paperwork you need.
Step 3: Know Your Score
After you gather the paperwork, get a copy of your credit report and credit score. You're entitled to one free copy of your credit report and credit score every year. After you get your credit report, check it to make sure the information on it is correct.
Depending on your lender and the actual loan product, a credit score of 650 or higher may help you get lower interest rates, but don't worry if your credit score is lower than that. You can improve your credit score by paying down any debts you owe, making payments on time and fixing any mistakes on your credit report.
Step 4: Shop Around
Now it's time to go shopping. Talk to several lenders and compare their refinancing options. Ask lenders these questions:
· How much can I borrow?
· What interest rate do I qualify for?
· What are the fees and other costs, and how much are they?
· What terms are available?
· How much will my monthly payment be?
· Is there a fee if I pay my mortgage off early?
· Am I eligible for any special mortgage refinancing programs, such as government sponsored refinancing programs?
· Are there any other special requirements?
Remember that just because a refinancing loan offers the lowest interest rate or monthly payment, doesn't mean that the loan costs the least. It's important to consider other costs, such as origination fees, points, appraisal fees, documentation fees, and closing costs.
Step 5: Line up Applications, Approvals, and Appraisals
When you've decided which lenders offer the best overall terms for refinancing your home, start the application process. The details of applying for a refinancing loan vary from lender to lender, but it's a lot like applying for your original mortgage. After you apply, you may receive an approval from one or more of the lenders you've picked. At this time, your lenders may need an appraisal, or estimate of how much your home is worth.
Step 6: Choose an Offer and Close the Deal
After you've been approved for a refinancing loan and decided which refinancing loan offer best meets your needs, choose an offer and close the deal. It's now time to verify information about the refinancing loan, take care of any final details, and meet with a notary to sign the paperwork and make it official. Remember to get any promises or details about your refinancing loan in writing, read everything carefully before you sign it, and ask a legal or financial expert to help you understand anything that isn't clear.
These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.
