Real Estate Closing Process for Refinance Transaction

You may choose to refinance your mortgage at any time throughout the duration of your loan to achieve a number of personal and financial objectives. When you refinance, your current mortgage will be entirely replaced by a new loan with a new term, rate, and monthly payment. Refinancing will take time and money, so be careful to discuss the costs and advantages of a new loan with your lender.

You can refinance with either your current or a new lender. What matters most is that the lender you select is reputable and provides reasonable rates and terms. Shopping around and comparing loan estimates from different lenders is the easiest method to see whether you're being given good terms.

Most common reasons to refinance:

Reduce your mortgage interest rate: If interest rates are lower now than when you took out your current loan, refinancing might cut your monthly payments and the total amount of interest you pay over the loan's term.

Switch from one type of mortgage to another: If your existing mortgage is a variable-rate mortgage that no longer fits your needs, refinancing into the security and stability of a 30-year fixed-rate mortgage might be an intelligent choice.

Build equity more quickly: If your financial position has improved since you bought your house, refinancing to a mortgage with a shorter term (e.g., from a 30-year fixed-rate mortgage to a 15-year fixed-rate mortgage) can allow you to build equity quicker, own your home sooner, and pay less overall interest.

Wish for cash-out: If you've built up much equity in your house over the years and want to use it for home renovations or improve your financial position, now is an excellent time to talk to your lender about a cash-out refinance.

Steps to a Successful Refinance

Working with your lender: Your lender will be your primary point of contact throughout your refinance, from performing a cost-benefit analysis to finalizing your loan.

You have the option of refinancing your mortgage with your current lender or with a new lender - this is your home loan, and you have options.

It's strongly suggested that you visit with many lenders and complete a loan estimate with each to discover the best loan for you. This will enable you to compare each lender's total expenses, annual percentage rate, and total interest percentage. You'll feel more at ease and secure about your selection if you search around. You'll interact with your lender in the same manner, you did during your original purchase, including completing the loan application, once you've chosen your lender and locked down your loan type and conditions.

Here's a review of the application process and what to anticipate if it's been a while since you bought a house.

1. In order to complete your loan application, you'll need to gather the following information with the help of your lender:
   • Paystubs for at least one month
   • All bank and investment account statements
   • Tax returns from the most recent year
   • Proof of any additional income is required.
   • A copy of your homeowner's policy
   • Statement of the most recent mortgage
2. Your information will be sent to your lender for approval and to determine your eligibility.
3. After completing your application, your lender will send you disclosure documents that detail the conditions of your loan, all projected expenses, and a payment plan.
4. If your loan is accepted, an appraisal will be scheduled to establish the home's current market worth.
5. When your documentation is double-checked to ensure it's complete and accurate, your loan will move to the underwriting step.