Refinancing made easy
Refinancing an existing mortgage can be just as stressful as taking out your first one, but it does not have to be.
People refinance for a variety of reasons, but mainly to get a lower overall monthly payment and interest rate, or to get cash out.
Although if you are applying for a refinance, you have already been through the mortgage process once, it can still be very overwhelming and stressful.
If you follow some easy steps and tips, you should be able to go through the refinancing process without a care in the world.
An article posted on Bankrate.com by Holden Lewis, “Four steps to a stress-free refi,” gives some helpful tips on the refinancing process.
The article explains four things to make refinancing easier on yourself: Know why you want to refi, provide paperwork promptly, lock long and keep in touch, but not too much.
“The first step, figuring out exactly why you want to refinance, is key. ‘Because rates are low' isn't the sole reason to refinance,’ Vella says. Getting a home loan is like buying a vehicle: You have many choices, and only some of them are right for you. When you go to an auto dealer, the salesperson wants to know whether you want to haul stuff, have fast 'n' furious fun, or feel like a master of your domain. Depending on your priorities, the salesperson might recommend a sedan, pickup truck, sports car or sport-utility vehicle.”
When you go to pick out a car, you will usually have a list of reasons of what you are looking for, and the same goes for a refinance. As stated before, there are a variety of reasons that a person may want to refinance, some other reasons include paying off the loan quicker, or bragging rights to your friends and neighbors. Whatever your reasons may be, make sure you tell your lender first and foremost.
As you already know, any sort of mortgage transaction requires a lot of paperwork, and refinances are no different. Ask your lender in advance what sort of paperwork and documentation you are going to need, and get it ready now.
Also, always remember to lock-in your interest rate. It is important that you get the interest rate amount and extension of the lock in writing to avoid any confusion in the end.
“Many lenders are telling refi customers that their loans will take up to 60 days to close. Other lenders stretch their estimate to 90 days. If you want to lock at today's low rates, make sure the lock extends at least up to the lender's estimate of how long it will take to close the loan.”
After you have done the following steps, your new loan is probably well underway. This is probably a time when you start to wonder about the status of the loan, but be sure not to bother your lender everyday!
“Ask for a timeline of the loan -- a document that spells out when each step is expected to be completed. ‘It relieves stress on the part of the borrower,’ Vella says. Getting a timeline from the lender might not get your loan closed before your next-door neighbors who applied on the same day, but it helps you understand what's taking so long -- and that can be the difference between a stressful and a stress-free refi.”
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