Refinancing your home loan, step by step.
Ready To Tackle The Whole Refinance Process? Here’s What The Experts Advise!
Refinance for the right reason. Aim to shorten — or at least maintain — your current loan term while lowering your interest rate.
Check your credit history and get your credit score. The better your score, the better the mortgage refinance interest rates you’ll be offered.
Check your neighborhood for recent sales of homes like yours.
Start by comparing refinance rates online. You can shop rates online all you want, but limit the window for submitting loan applications, or allowing your credit report to be pulled, to a two-week period to lessen the impact on your credit score.
A home loan refinance can trigger a bunch of fees: application fees, the cost of an appraisal, origination fees, a document processing fee, an underwriting fee, a credit report charge, title research and insurance, recording fees, tax transfer fees and points, to name several. But remember, you’ll get a clear estimate of mortgage loan fees from each lender you consider. And don’t jump blindly for a “no-cost refinance” pitch. This means the lender is moving the upfront fees to your ongoing costs for the loan, in the form of a higher interest rate — or a greater loan balance.
This can be a bit harder these days because so many of us do our financial business online. However you’ll need to print or download statements, pay stubs, and whatever else the lender will need during the loan process.
You’ll have to decide whether or not, and when, to lock in your mortgage refinance rate with the lender, so the rate you’re offered for your new loan can’t change during a specified period prior to closing. For the logically minded, it’s a hand-wringer — more art than science.
There are likely going to be property taxes, insurance, closing costs and other fees to pay at closing. So be sure to set aside enough to cover them. Again, it’s listed in your loan estimate, so there should be no surprises. In some cases, these costs can be added to the mortgage balance, which, on the one hand, limits your upfront costs but, on the other, increases what you owe on your home.