Home Loans: Refinance You have owned your home for a while and would like to redo your mortgage, maybe to get a lower interest rate or consolidate your various loans. Here are some important things you should know about the loan process for a home refinance loan:
Mortgage. Just like your existing mortgage, the money you borrow will be “secured” by your home. As is the case with your existing mortgage, the home will serve as collateral for the benefit of the new lender. Your existing mortgages will have to be paid off in full and cancelled, unless the lender will allow an existing mortgage to be “subordinated.”
Application Forms. As was the case for your existing mortgage, your lender is required by various laws to provide you certain forms and disclosures in the loan process. These forms will show you information such as how much you are borrowing, the length of the loan, the interest rate and closing costs. You will be asked by your lender to complete a loan application and supporting forms and to provide information such as paystubs.
Credit Score. In determining whether to approve your loan, your lender will check your credit score to see if you have good credit. If you don’t have good credit, the lender might still be able to offer you a new loan under an alternative credit program.
Appraisal. Often the lender will also require that the home be appraised to see how much it is worth. Your lender will set the maximum it will loan you as some percentage of the appraised value.
Closing. When your home loan process is ready to be finished, you will have a meeting for signing your final documents. This meeting will usually happen at a title company or attorney’s office, or could be at your lender’s office. Depending on the loan terms, you might have to bring funds to cover closing costs. After you have completed the closing, the mortgage will be recorded with the appropriate local governmental body and you will then be able to draw funds from it.
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