There are many reasons why people decide to refinance an existing mortgage. Getting a lower interest rate may be one of the most convincing reasons. Naturally, the lower interest rate means lower monthly payments. But there are also those that want to get out of the variable interest rates and would like to get into a fixed rate mortgage. Variable interest rates are more volatile and can become a higher rate during the course of paying off your mortgage. Undoubtedly, this can become difficult to your financial situation depending on your cash flow. A fixed rate loan with a low premium every month is always desirable. This is truly the only option that allows you to make future financial plans with confidence.
Steps To Begin A Refinance:
- The first step is to determine if refinancing is right option for you. You may not be familiar with the mortgage business and all of the factors to consider. In this scenario you may want to speak with a mortgage professional that can help evaluate your specific situation and determine what is best for you.
- The next step is to check your qualifications for a home loan refinance. This includes your credit score and debt to income rations. It is important to make sure you are in good financial standing when considering your financing options. If you find that there are undesirable marks on your credit or debt rations, don’t panic. There are several options that can help you reconcile any issues that you might find during this assessment. Most importantly you want to be aware of anything that may arise during this stage and be proactive to resolve something that might prevent you from being approved for future financial needs.
- Next you will need to contact a preferred mortgage lender. Finding a lender for the best flexible mortgage deals is not tough but you have to be analytical to get the best deal. Many lenders offer flexible terms and conditions for refinancing but each company is different. A mortgage broker typically has a connection with the various lenders and can often provide better rates because they have several lenders fighting for your home refinance. Once you decide which lender to use and the option that best meets your needs, the mortgage lender will begin the paperwork process.
- The application to the mortgage lender can often be completed online, over the phone or on paper and sent through fax/email. You will need to complete several forms and provide the lender with proof of verifiable income. These documents typically consist of W2s, pay-stubs or copies of tax returns for self employed individuals. The mortgage lender that you choose will be able to help guide you through the process of obtaining and submitting your information. The application for the refinance may take up to 1 month to process. However, to avoid delay or hassle, let the bank or lender know if you have a home equity line of credit or an existing second mortgage that you plan to keep.
When considering a home loan refinance many families become deterred by the steps listed above. Often because many are not familiar with the process, it can be very discouraging even through the financial benefits are often significant. It’s important to remember that there are mortgage resources available that can help you determine what is best for your situation. Don’t become discouraged and lose out on saving money every month. The decision to refinance your mortgage could be one that saves you thousands.