This is an excellent time to refinance. Rates are at historic lows and there are streamline programs available that make it easier than ever. FHA approve lenders can offer FHA streamline refinances. Borrowers can use the HARP program if their home value has significantly declined and a VA approved lender can help veterans take advantage of low rates as well.
Slight deductions in interest rates make a large difference in your monthly payment and the amount of interest you will pay over the life of your loan. For example a $300,000 mortgage loan at 5.5% for 30 years would have a monthly principal and interest payment of $1,703. That same loan with a 4% interest rate would have a monthly payment of $1,432. With a payment difference of approximately $270 a family could use that money to pay for a new car or save up for a much needed family vacation.
Steps to Refinance Quickly and Easily
- Contact an FHA approved mortgage lender. This will give you access to the majority of available loan programs. Each lender has to go through an approval process so ask if they are approved when calling.
- Pull out your loan statement. Tell the lender what you currently owe, your monthly payments, and your current interest rate. This will help them determine if today’s interest rates would save you money.
- Gather your personal financial documents. This includes pay stubs, W-2’s, tax returns, and bank statements.
- Locate your home owners insurance policy and provide a copy to the mortgage lender.
- Complete your application over the phone, online, or in person with the information found on these documents.
- The lender will send you a Good Faith Estimate (GFE) to review. This will list out your new loan amount, monthly payment, interest rate, and fees associated with closing the loan. If the terms are agreeable return the GFE along with the signed disclosure documents and the previous items you collected.
- Underwriting will commence once you send in the signed paperwork and if anything else is needed they will contact you.
- Respond quickly to any requests for documentation so that you do not risk losing your interest rate lock. Rates change with the market and a typical rate lock will only last for 30 days.
- An appraisal will be ordered by the lender, if one is required. Present your home in the best possible light, as the appraiser will be taking pictures.
- Once the appraisal is back and your documents have been reviewed the underwriter will issue a final approval, or let you know if you do not qualify at this time. After the final approval is issued loan documents will be drawn up.
- Sign the loan documents at your lenders office, with a notary, or at escrow and return them promptly for processing. They do have a time limit and you do not want them to expire.
Your entire refinance can be done remotely and the process can go fairly quickly. You can help to expedite the process by having all of your personal information ready when you make the first call. During the refinance process make yourself available for calls from your lender and respond promptly. This will help you get through the process faster so that you can start saving money.