Understanding what you should expect from a typical mortgage refinancing process can help you get through it quickly and without the stress that can often result. Being prepared is necessary if you want to get your loan approved in as little as ten business days.
You will work with a mortgage professional who will help you complete your refinance mortgage application. That individual is responsible for collecting your supporting information to help get you pre-qualified. Be prepared to provide information on your current mortgage, property value, income, and credit history. It is common for lenders to request details from the most current one to three years of tax returns.
Once you have been approved, a loan officer will contact you to review refinancing options. This is when you will be presented with different loan scenarios which will have associated refinance rates. It is at this stage in the process you will need to decide to proceed with a specific loan option or end the application process. If you decide to proceed, you will be presented with a "Good Faith Estimate" which details the loan offer. Refinance rates are still estimated at this point as are loan costs.
For your loan to be approved, an appraisal of your property will be ordered. The market value of your home is what is used to determine final refinance rates and monthly payments. Most appraisals are good for three to six months.
After your application and supporting documents are submitted and the appraisal is completed, the verification process begins. All of your information will be third-party verified. For example, the IRS will be contacted to confirm your income information as stated on your tax returns. It is common for lenders to require several months of bank statements to ascertain your spending habits and financial stability. They may want those statements to come directly from your bank or for your bank to at least confirm their authenticity.
This is the actual approval phase of the home refinance process. Underwriters will review everything you have submitted along with your application, their verification documents, and the appraisal. Once they are satisfied, your loan will be approved. If any changes need to be made to the "Good Faith Estimate" as a result of verified information or the appraisal, you will be notified at this time.
If you agree to accept the loan, a final settlement statement will be prepared by the title company. A closing date and time will be scheduled for you to review and sign the loan documents. And your home refinance is completed.
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