Refinancing is complicated and sometimes difficult to understand. The majority of homeowners only refinance once in their lives. Hence prospective refinancers don’t spend much time learning about the process.
Refinancing should be easy, affordable, and painless for every homeowner. Although no list can cover every scenario, these are the key points to a successful mortgage refinance. They will help you decide whether or not you want to refinance, navigate the refinance process, and let you sleep easier at night knowing you have made a good financial decision. Explore residential purchase escrow in this article.
This is our list of top tips and tricks to help you get a mortgage to refinance done successfully – from start to finish.
Deciding for residential purchase escrow
Do: Make sure to check your credit report for errors. Nearly 80% of credit reports contain them. And do not let errors in your credit report stop you from receiving the best rates.
Don’t open any new credit lines, buy a car, or spend on the designer bag that you’ve been eyeing.
Do: Calculate your breakeven point and understand it. This will allow you to estimate the time it takes to repay your refinance costs and get a lower mortgage interest.
Don’t blindly follow the advice of your mortgage lender. Be educated. Do the math. Before you sign, make sure you understand the pros and cons of a refinance.
Do: Take the time to gather financial and personal information. Your mortgage refinance will go more smoothly and be more successful if you are prepared.
Don’t irritate your mortgage lender as it may cause problems.
Do: Find out if there is a prepayment penalty if your loan is paid off early.
Do not blindly enter refinancing without understanding the consequences of paying off your existing loan on time. Talk to your lender for more information.
Get a quote and compare lenders
Do: Shop carefully. You can use the internet to know complete details and find the best rates.
Do not believe that shopping at the bank with your savings account will give you the best rate. Although some banks offer discounts to their customers, it is unlikely that you will get a lower rate simply because you do business with them.
Do: Ask mortgage lenders the same questions as a doctor, lawyer, or accountant. Ask for quotes and compare the quotations of different lenders to meet your needs.
Do not assume that all lenders and refinances will be the same. Each deal is unique and each lender offers a different version of “good customer services.”
Learn about the available refinancing options. Answer the questions: Which loan programs are available to me? What is the monthly cost of each program? How much will I be responsible for up front? What about points?
Do not assume that all lenders will charge the same fees for credit checks, appraisals, and other financing-related services. Ask the questions and compare the results.
Do: Ask about lock-in rates or float-down provisions. Rates may differ from the closing rate depending on when you start.
Credit and application screening
Do: Before you submit a loan application, make sure you are comfortable with your loan officer and all the programs they offer.
Don’t shop for additional lenders to start the loan process “just to look at what they have.”
Do: Before you submit your application, make sure that all your financial documents are in order. You should check your credit report and organize your financial documents. Also, make sure you have money set aside for closing costs.
Prepare yourself for what lies ahead so that you won’t stall the process. Be ready to submit your application when you are ready.
Examining Financial Documentation and Disclosures
Do: All lenders must provide a HUD-1 settlement document, which lists the fees charged at closing. To ensure consistency, you should compare this document with the good faith estimate given at the beginning.
Please do not sign the dotted line until you are clear about the expectations.
Appraisal and Escrow
Do: Be realistic about the value of your house. Many homeowners fail to recognize the decline in home values and make unrealistic assumptions, which can stall your refinance.
Do not bribe an agent. Consider making small home improvements that will increase your home’s value before refinancing.
Do: Ask your lender for information about escrow Los Angeles and whether an account is required to fund your refinance. It is easy to overlook the expenses associated with an escrow account.
