Refinancing Your Home, Step-by-Step
When you refinance, you pay off your existing mortgage and take out a new loan. You might refinance to lower your monthly payments, repay your loan sooner, or get cash at closing by borrowing against the equity in your home. If you refinance, your total finance charges may be higher over the life of the loan.
The process for refinancing is similar to what you went through when you got your original mortgage. However, if years have passed since you bought your home, you may notice a few new steps in the process. To make sure you know what to expect from start to finish, Guardian Mortgage Inc has developed this list of refinancing steps.
BEFORE YOU BORROW
Save up. You will need money for closing costs, or you may be able to finance them as part of your loan amount.
Know your credit score. A good credit score helps when you apply for refinancing. High scores get the best loan pricing options and make the approval process go smoothly. With a low score, you may have a higher-priced loan plan.
We will look at your credit report and score when you apply for a new mortgage. So you know what’s in your credit report before you talk to us, correcting any errors and taking steps to potentially improve your credit score if possible.
Gather your financial paperwork. These are the documents to have at your fingertips. You may be asked for additional items, depending on your situation, but this list will get you started.
- Social Security number and date of birth.
- A list of your employers for the last two years, including names, addresses, and telephone numbers
- W-2 statements and tax returns for the last two years
- Pay stubs for a 30-day period showing year-to-date earnings. If you are self-employed, you may have to provide alternative documents to verify your income, such as federal tax returns.
- Bank account numbers and balances for your checking, savings, and money market accounts to show that you have enough cash to cover the closing costs and have cash reserves
- An itemized list of your monthly expenses, such as mortgage payments, credit cards, car or student loans, etc.
THE APPLICATION PROCESS
Complete an application. You can apply with your Guardian Mortgage Inc loan officer. When you submit your application, you will pay the credit report fee. After your loan disclosure documents are provided, you will be asked to pay for the appraisal with no other fees due until closing.
Compare loans. Your reasons for refinancing will help to determine which loan will meet your needs. Your Guardian Mortgage Inc loan officer can answer your questions and explain fixed and adjustable rate mortgages, mortgage rates, and repayment terms.
You will receive written estimates. Within three days after we receive your completed application, we will mail or email the Truth in Lending (TIL) and Good Faith Estimate (GFE) to you. These documents provide an itemized list of the mortgage’s fees and costs and details about the interest rate and how it affects the cost of your loan.
After the final TIL is delivered to you, there is a seven business day waiting period before closing as the law requires. This gives you time to look over the TIL to make sure you understand the costs and terms of the loan before you are financially obligated. You may also use the waiting period to compare rates and fees from other lenders if you wish.
WHEN YOU DECIDE TO GO AHEAD
Lock in your rate. The interest rate shown in the TIL is valid for a certain period of time and could change if you wait to move forward with the process. You can lock in the rate by talking with your Guardian Mortgage Inc loan officer. A Rate Lock Agreement will be sent to you to sign and return. This gives you peace of mind, knowing you are protected from interest rate fluctuations.
We do the rest. Guardian Mortgage Inc is typically able to move a loan from application to ready to close on average in 20 to 30 days. During this time, we will:
- Check your credit history and credit score
- Verify your income, assets, and cash reserves
- Have the home appraised to determine the market value
- Order a title search on the property
- Obtain any payoffs on any outstanding mortgages.
- Obtain the evidence of sufficient homeowners insurance coverage
- Arrange the date for the closing with settlement company
At the closing. You and the settlement company’s agent will attend the closing which typically lasts about one hour. Your role is to review and sign the documents related to the loan and to pay the closing costs.
Our Certified Mortgage Planner Specialists will guide you through each stage of the process and provide you with expert advice along the way. We are committed to making the home refinance process clear, informative, and simple. At Guardian Mortgage, we understand that you want to get the best refinance deal. That’s why we are committed to providing you with the information you need to make well informed decisions.
