Home Mortgage Refinance Step by Step Guide

Are you considering a home mortgage refinance? Perhaps you’re looking to switch to a lower interest rate. Or maybe you’re wanting to take out cash in exchange for the equity you’ve built. Either way, if you’ve never refinanced before, you probably have some questions about the process. This step-by-step guide will teach you everything you need to know.

Process for Refinancing Your Home Mortgage

When you refinance your mortgage, you’re essentially taking out a new loan. The new loan is used to pay off the one you already have. Then, you’re left with just the new mortgage with a different rate and terms. Therefore, the refinance process will be somewhat similar to the one you went through when you bought your home.

Here’s a closer look at the steps involved with a home mortgage refinance:

Step One: Applying for the Loan

The first step in the process is to apply for the refinance loan. You can either choose to stick with your current lender or apply with a new one. Whatever direction you decide to take, you’ll need to prove that you meet their requirements for refinancing. This usually involves submitting various documents such as your bank statements, pay stubs, and/or W-2s as proof of income. Your lender will also want to review your assets and credit history, which means you’ll have to undergo another credit check.

Step Two: Underwriting

Once your application has been submitted, the next step is the underwriting process. During this phase, your lender checks all of your documents and application details to verify that they are correct. They’ll also go through the process of verifying the details of your home. This means that in order for the underwriting process to be complete, you’ll need to have your home appraised.

Step Three: Refinance Appraisal

Next, an appraiser will come out to your home to determine its value. During the appointment, they’ll do a thorough walk-through and examination of your home. Then, once they’ve determined its value, they’ll complete a report which will be sent to your lender. If your home’s value is equal to or greater than the amount of your new loan, you’ll be able to move forward with the next step in the process. If the value comes in low, you and your lender will need to come up with a new plan, which may involve making some adjustments to your application.

Final Step: Closing

The last step in the process is closing on your loan. A few days before closing, your lender will send your Closing Disclosure for you to sign and review. Then, you’ll attend the closing, sign all the necessary documents and pay for any closing costs that aren’t rolled into your loan. After this final step, the process is generally considered to be complete.