Refinancing your current home
I'm thinking about refinancing my home. What do I need to know?
1. What liens are attached to your property and how much is owed. For example: 1st Mortgage, 2nd Mortgage (Home Equity Line of Credit), Tax Liens, Judgements, etc.
2. What your property is worth. Your Mortgage Loan Officer should be able to help you determine an estimated value based on recent comparable sales in your neighborhood, square footage, original purchase price, market conditions, etc.
3. #1 and #2 will help you determine your "Equity."
4. How much you qualify for based on your credit, income, existing debt, etc. The final loan amount will be a percentage of your home's appraised value. For Example, 95%, 90%, 85%, etc.
5. #1, #2 and #4 will help you determine your "Available Equity."
6. Determine if you will need "Rate & Term" or "Cash Out" refinancing. There are a number of differences between the two types of loans. Your Loan Officer should have all the answers to your questions.
7. Will you be able to "wrap" your closing costs into the loan? Your "Available Equity" situation will determine if all or part of your closing costs can be included in the loan.
8. Once you have provided your Loan Officer with the required documentation to secure your "Pre-Approval" an Appraisal, Title Work and Proof of Homeowners Insurance will be ordered. ($350 - $450)
9. The appraised value, together with your pre-approval conditions, will dictate the maximum loan amount.
10. The Title Company closes the loan paying off the existing 1st Mortgage and any other liens resulting in a new 1st Mortgage on your property.
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