Thinking of refinancing your home?
Refinancing allows you to take out a new loan to pay off your current mortgage, which in turn lowers your monthly house cost. But with mortgage rates constantly changing, it’s hard to determine your best option.
If you are one of the millions of homeowners who is considering stepping foot into the refinancing process, we want to help you better understand how it works. It’s always better to step into a big decision with a well-thought-out game plan, so here is a step-by-step breakdown.
1. Make a pros and cons list
Just like any big decision, it’s important to take a step back and assess the benefits and risks of the situation at hand. Many people believe refinancing is a no-brainer if it means lowering your monthly expenses.
However, you must look past the immediate monthly savings and assess whether it will truly save you money in the long run. We recommend that you sit down and make a list of pros and cons to help you decide if refinancing is your best option.
2. Check your credit and finances
Determining your credit score is probably the most important step in the refinancing process. A good credit report results in the type of rate you will receive on your new loan. Therefore, you will need to get the most accurate update of your credit prior to even applying for a new loan. Ensure that there are zero errors before moving on to the next step.
3. Consult a professional
Just like the buying you did prior to purchasing your house in the first place, you will want to seek professional help in order to provide for a smooth refinance system. Whether it’s from your bank, mortgage lender or brokers, begin gathering quotes and assessing what option feels best for you.
We recommend working with someone you trust, perhaps even a lender who has been referred to you based on his or her past experience. The more you trust your lender, the more at ease you will feel throughout the rest of the process. Our agents at Network Real Estate would be more than happy to connect you with a mortgage lender we trust.
4. Apply and review
After completing the preliminary research and evaluating all of your refinancing options with a professional, it’s time to begin applying for the refinancing loan of your choosing.
Begin completing the loan application, making sure you have provided the most accurate information. One simple mistake on a loan application could lead to suspicion from your loan reviewers during the underwriting phase. Confirm that your loan agent has everything they need in order to efficiently move forward with the process.
Your underwriter will then gather the appraisal and application information, review the documents carefully and provide you with your new loan options. Make sure you have acquired all necessary documentation.
After thorough review, the underwriter will issue an approval letter with the terms of your new loan. Now, it’s your turn to meticulously review the details to affirm you are satisfied with the new conditions.
5. Lock it in and close
Upon satisfaction of the new loan, you will then lock in your new rate, gather the necessary documents and get ready to close. Reviewing the documents at least 24 hours prior to closing will help you remain confident during the closing process. Upon closing, you will receive the official closing statement along with your new mortgage.
Although the process might seem daunting, we can assure you that with the proper preparation and professional assistance, the refinancing process is not as scary as it seems.
Network Real Estate is well-versed in the real estate world in Wilmington, and we would love to put our years of experience and skill to use to help you in your refinancing journey.
Neal Johnson is a CMCA, CRB, CNE and GRI-certified, licensed real estate broker at Network Real Estate, which has exclusively served a high volume of property sales and purchases in the greater Wilmington area for more than 30 years. With three offices at College Road, historic downtown Wilmington and Pleasure Island, Network’s brokers are widespread and well-versed in this marketplace, making Network a preferred real estate company for first-time homebuyers and beyond.
Jessica Maurer - Aug 3, 2020
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