If you're a homeowner ready to take advantage of today's low rates and/or the equity you've built in your home but you don't know how to refinance your mortgage, don't despair. With a little planning, today's easy online tools, and accessible mortgage and lender information online, homeowners can easily gather the necessary details and do the research needed to refinance an existing home loan.
Here's what you need to refinance your mortgage in five quick steps.
Collect the Necessary Paperwork
No matter which lender or mortgage you choose for your refinance, they're going to ask for financial information about you as a borrower. Start preparing for your refinance by printing off or collecting recent bank statements, pay stubs, savings and investment information, tax returns and statements, and current mortgage and home information. If you or your spouse is self-employed or owns a business, you will need to provide tax and income information on the business as well.
In addition to this financial information, lenders will want to do a credit check to review your borrowing and repayment behavior. To ensure you don't have any nasty surprises during your refinance application, order a free copy of your credit report and review all accounts and items to confirm the information is complete and correct.
Research Government Refinance Programs
Depending on your household's financial, income, and/or career situation, you may qualify for one of the refinancing options available under the Making Homes Affordable (MHA) federal program. Programs under MHA include Home Affordable Refinance Program (HARP), Home Affordable Modification Program (HAMP), as well as programs for military families, and may help reduce the costs of your refinance.
Get Refinance Quotes
When you're thinking about refinancing your mortgage, and if you've been happy with the service from your current lender, start there. This may save time and money as they already have much of your information in their system, and they may even be willing to reduce or waive fees to retain your business. If not, shop around.
Borrowers familiar with how to refinance a home know it's important to avoid multiple credit inquiries in a short time period, as this type of activity may lower your credit score by flagging you as a credit seeker. Instead, refer to your credit report information and use a tool like Lending Tree's free and easy mortgage comparison tool to shop and compare refinance mortgage rates.
Find Out About Refinance Fees
Refinancing a mortgage loan involves some effort from you as the borrower, as well as the loans officer, appraisal office, and legal department. Therefore it should come as no surprise that there are several fees involved with refinancing. When you're researching how to refinance a mortgage, and comparing refinance offers, ask each lender exactly what fees will be charged, and how much each fee will be. Loan application fees, credit check fees, appraisal fees, loan origination charges, title search and title insurance fees, and processing charges are typical payments associated with a home loan refinance.
Choose Your Mortgage and Lock In Your Rate
Once you have the information needed on the various mortgage rates, features, and charges, it's time to pick the best option for your situation and lock in your rate. Taking the time to make a careful decision may help you avoid typical mortgage rate mistakes.