You’ve probably heard it often — another friend or neighbor has refinanced and is enjoying lower monthly mortgage payments. You may have read headlines that talk about mortgage interest rates reaching historical lows. You may ask, is now the best time to refinance my mortgage?
Refinancing is essentially paying off your existing mortgage and taking out a new one. The purpose in most cases is to lower your monthly payment, your term, or take cash out of your equity to a home project or even education.
Overview of the Refinance loan process
Similar to the traditional home purchase process, we will require you to complete a loan application. The application assesses your financial situation, credit history, the property value, the amount of equity in your home, and other data.
Many people view the loan process as time-consuming and tedious, but it doesn’t have to be. We’ve built the most convenient home loan service ever! The application will ask you questions about your home finances and takes less than 20 minutes to complete. As soon as you’ve finished the application we’ll review your request for approval. If your application is approved we can begin to process your request immediately.
After your application is completed, our family mortgage advisor will contact you to introduce themself and to answer any questions you may have. Our family mortgage expert will be avaiblabe througout the process and provide guidance along the way.
The loan application is a detailed form designed to provide information from you that your lender will need. You can either apply online, in-person or over the phone. Most often we can complete the application for you over the phone. We use the application to evaluate whether or not we can give you a loan. The “four Cs” of credit come into play when filling out an application — they are capacity (ability to pay), credit history, capital (assets) and collateral (property).
The loan application form requests information such as
- Bank account name and balances, all pages
- Information about where you work, how much you earn and additional sources of income you have
- Outstanding debts (installment loans and credit cards with names, payment and balances)
- Information about your present mortgage will also be required, such as
- current monthly payment
- outstanding mortgage balance
- status of property tax and insurance payments
- our contact information
When we review an applicant’s credit history, we examine all the information in a credit report. This includes your credit cards, student loans, automobile loans, public record (judgements & bankruptcy) and other loans. We review how you have made your payments — on time or late. Your credit report also notes 3 credit scores per borrower.
What is a Credit Score? Credit scoring is a quick, accurate and consistent scientific method for assessing credit risk. Your credit scores are based on data stored by a credit repository about your credit history and payment pattern. Most credit scores estimate the risk a company incurs by lending you money or providing you with a service — specifically, the likelihood that you’ll fail to make payments in the next two to three years.
Credit scores are calculated by statistical models that assign points to factors indicative of repayment. These scoring models exist in software utilized by credit bureaus or lenders. Credit scores are based on data rather than human judgement, making credit scoring an objective risk assessment tool as opposed to a subjective. Credit scores range from 300 to 850, but the majority of scores fall within the 600s and 700s. Higher scores indicate a lower credit risk.
An opinion of a property’s fair market value, based on an outside third party licensed professional appraiser’s knowledge, experience, and analysis of the property.
Next, we compute how much equity you have in your home by taking the appraised value of the home and subtracting any mortgage debt. For example, if your house is valued at $150,000 and your mortgage balance is $80,000, you have $70,000 equity in the house.
Time and Costs
Some of the types of fees you paid during the closing on your original mortgage will be charged during a refinance. These may imclude a title search and title insurance fees, appraisal costs, loan origination fee, flood hazard certification, tax service, recording, underwriting/funding fee, discount points, prepayment penalties, and if applicable, legal service fees. Most of our clients choose to roll these costs into the refinance and are not out of pocket.
Give us a call now to check out our current rates and to see if you qualify.
302-266-9500 or toll free 877-266-9500
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