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The steps to refinancing a mortgage are relatively
straightforward once you get past all of the legal-jargon and
bank talk. You will still need to understand what you are doing,
and we are here to assist you in comprehending the mumbo-jumbo
before you do the wrong thing.
On first overview we like to consider at a couple of points with any refinance. How long have you had your current mortgage loan? A loan recently taken out in less than 12 months is very unlikely to benefit the consumer and is most often just to generate a commission for a loan originator. The exception to this is a loan that has been obtained through a builder’s lender with a new construction home purchase and the building contractor gives out great incentives to use their in-house lender. Most often we will tell buyers to take advantage of the incentives and close on the loan. Once closed, we offer to refinance immediately after closing in order to give a much lower interest rate on the loan. Refinancing in this situation can be very beneficial for the consumer.
If the borrower has had their current mortgage for well over five years, we will strongly consider the current position of their amortization. At this point in may not be good financial decision to refinance for the consumer. It’s always best to consult with a local mortgage professional so you can make the right financial decision.
There are essentially four questions we should talk about before refinancing a mortgage loan:
1. What is your reason, purpose, or goal for the refinance? Most often people are misled or misdirected by emotional sales triggers to refinance and in doing so may hurt their overall financial picture or plan. If we think a refinance is bad for you, we will tell you and explain why.
2. Is the “total cost” to refinance going to be worth it? What is the break even point of these cost? We should be discussing the total cost of this refinance together. At High Definition Mortgage, we do not have any fees but having a totally understanding of the cost with everything involved in the transaction including title insurance and state taxes is an important part of the process.
3. Did you know your current amortization schedule will change? Most people do not know how amortization really works. Having a full understanding of this before you refinance and knowing that this will be starting over, may have a big impact on whether refinancing is truly a good way to go.
4. How long am I going to keep my home? This is a huge question and is different for every person or family. Outside of Florida the average family stays in a home well over seven years. But here in Florida the average home is only held for 3.4 years. This is something to really think about before cutting into your home’s equity.
Step One: Fact Finding and Pre-Approval
Things you need to consider:
• How much do you earn?
• How much do you spend?
• How good is your credit?
• What type of loan do you currently have?
• How much is your current mortgage loan balance?
• How much do you estimate your home’s current value?
You will have to authorize us to run your credit score and report.
We will then need to collect your personal financial paperwork, including the last two years tax returns, your last pay stubs, and other assets.
Step Two: Complete the Application
• We have made this process very easy for you. Online or from your cell phone you can enter the basic information about yourself and your home by following the simple process and authorizing us to help you move forward.
• Once the above is completed we will have all your disclosures ready to sign, including a loan estimate. Once this is completed, we will run Desktop Underwriter (DU) or Loan Prospector (LP). This is a pre-underwriting guide that helps us to put a file together based on your specific situation.
Step Three: Selecting your loan program
• We believe that selecting the best loan program should be your choice and never based on how much a lender or bank will be paid behind the scenes. We will educate you on all your choices, so you can make the best decision for your financial position and goals.
Step Four: The Appraisal
• We start by checking to see if the property is eligible for an appraisal waiver. We don’t want you to have to spend hundreds of dollars if it’s not necessary. The appraisal process is the longest part of the loan process. Depending on the appraisal type needed, it may take anywhere between 5 to 8 days to complete. The appraisal will be a big factor in determining the amount of the loan.
Step Five: Underwriting and final
• Once your file has been completely underwritten, a “clear to close” status will be issued along with the closing disclosures. These closing discloses we want you to review and ask many questions. From here we will work with the title or closing attorney you have chosen to make final adjustments. Once everything is complete, we will set up your time to sign your new mortgage loan documents.
If you have any questions or would like further assistance, please contact us directly and we will try our very best to help wherever possible.
As Florida mortgage brokers, our services have been designed to remove the stress and misunderstandings commonly associated with a mortgage loan.
For further information about getting the right mortgage for you
and to arrange your ‘NO-FEE ASSESSMENT’
Call us on 941-444-9240