Applying for a refinance is similar to applying for a first mortgage loan. You’ll submit an application to your lender along with some financial documentation. Your lender will then schedule underwriting, an appraisal and your closing meeting. Do you think a rate and term refinance might be right for you? Here’s more information on what you can expect to do when you get your new loan. The first step in any refinance is to apply with your lender of choice. Research lenders in your area and consider current mortgage interest rates. Submit an application to your lender and specify that you want to refinance your rate or term. Your lender will ask you for a few important financial documents when you apply for your refinance, including your:Apply For A Refinance
- Two most recent pay stubs
- Two most recent bank statements
- Two most recent W-2s
You may need to provide more documentation if you’re self-employed. Have your paperwork in order before you apply for a faster refinance.
Your lender will begin the underwriting process once you submit your application. Your lender verifies your income during underwriting and makes sure that you qualify for a refinance. Respond to all lender inquiries during this time to help keep your refinance on track.
Lock In Your New Rate
Your lender will give you a document called a Loan Estimate after you apply for your refinance. Your Loan Estimate gives you an estimate of the fees and costs of your loan. Hang onto this document – you’ll need to compare it to your Closing Disclosure later on.
You’ll also have the option to lock in your mortgage rate. Interest rates change on a daily basis. When you lock in your rate, you protect yourself from interest rate changes that occur between your refinance application to closing. Most lenders allow you to lock your rate for 30 – 60 days.
Want to extend your rate lock? You may need to pay an additional fee.
Get An Appraisal
Your lender will also schedule an appraisal to determine your home’s value. Appraisals are important because they assure your lender that they aren’t giving you more money than your home is worth. You’re free to attend your appraisal. Make sure your property is in the best condition possible before the appraiser arrives.
Opting for a certain type of refinance like a VA or FHA Streamline? You may be able to skip the appraisal requirement.
Review Your Closing Disclosure
Your lender will issue you a document called a Closing Disclosure before you attend your closing. Your Closing Disclosure contains important details about your new loan. You'll find your principal balance, interest rate and monthly payment. Read through this document carefully and make sure the terms match up with the refinance you want.
Be sure your monthly payment is lower than your current payment if you want to refinance to a longer term. Taking a lower interest rate? Your monthly payment should be lower as well. Compare your new Closing Disclosure with the terms of your current loan and make sure things match up.
Close On Your Loan
It’s time to close on your loan once your lender finishes underwriting. After you’ve read your Closing Disclosure and make sure the terms are correct, contact your lender and acknowledge that you’ve received the Closing Disclosure. Your lender will then schedule your closing meeting.
At closing you’ll ask any last-minute questions you have about your new loan and sign all the necessary paperwork. Bring along your photo ID, your Closing Disclosure and a proof of transfer or a cashier’s check for closing costs. Your lender will appoint a neutral third party to conduct the closing and finalize your refinance.
