Surviving The Home Refinancing Steps
Jul 13th, 2008 by Traffic
Since mortgage rates predictions are for rises at some stage soon, now is the time to investigate process of refinancing. Locking in lower interest rates is always a smart move, and you want to be set for the turbulent times ahead. Plan to stay in the same house for at least 10 years, to keep your financial advantage from refinancing while mortgage rates are at historic lows.
While the process of refinancing in general are pretty much the same for everybody, there are always little differences, depending on who your new mortgage lender is, and the lender or lenders who will be paid out of your current loans. As a borrower, it is very important that you understand the process of refinancing.
A crucial first step in refinancing your home will be to determine the current market value of your home. In an ideal world, this valuation would represent the price that you could obtain if you were to sell your home on the open market.
Unfortunately, in some parts of the country it can be very difficult to obtain market value when selling your home right now. The mortgage lender who will provide your new mortgage will decide on a valuation of your home against which they will be prepared to loan you money.
This valuation may be lower than you think it should be, or even lower than the amount you want to borrow. In this case, you may actually have to stop and rethink whether to go on with the rest of the process of refinancing.
If there is a shortfall between the amount your new lender is willing to advance, and the amount you need to pay off the existing mortgages, then refinancing your home may not be the right option for you at this time.
If the valuation comes back at an acceptable level, then you can proceed with the rest of the process of refinancing.
You will need to provide your new lender with documentation showing your income and expenses, and also showing the current mortgage or mortgages, and what is owing on them. Do not try to conceal if you have missed a payment on your current mortgage - be honest with your new lender or you could end up in much worse trouble down the track.
Your new lender will do a credit check, and let you know a settlement date. That is the day when the old mortgage or mortgages will be paid out, and your new mortgage will begin.
You can use a good mortgage calculator to calculate the amount of your new monthly mortgage payment, to see how much you will be saving.
There is nothing complicated or difficult about the process of refinancing, but if you don’t like paperwork and dealing with banks, you may find you are very relieved to reach the end! Many people find the process of refinancing stressful, but if you have chosen wisely you will find the results are worth it. Given that mortgage interest rates predictions are for rises at some stage soon, you may have a lot to gain.
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