Specific Steps to Refinancing Your Home
Stay in The Know
The first step to refinancing your home or car is to know exactly how much it’s worth. You may already have a fairly accurate idea, but it never hurts to get a home appraised. You don’t need to know to the exact penny, but the bank will need this information if you plan on refinancing.
Divide the home’s value by the amount you still owe on your current mortgage. If you home is worth $100,000 and you still owe $80,000, you owe 80% of the home’s value. Keep this number handy. If you have a home equity loan, add it to the total amount due on your mortgage.
Know who to Call
The next step is to start making calls. Do you owe more than the house is worth? If so, call a mortgage servicer right away. You may actually be eligible for a home affordable refinancing program, or HARP. Do you owe less than 90% of the total value of the home? Your best bet is to stick with your current provider.
When you contact a provider about refinancing, you’ll be asked about your assets. Let your loan officer know about any and all assets you own. Retirement accounts, mutual funds, investments, and stocks or bonds are all important. The more you have reserved, the easier it will be to get a good refinancing loan. Keep in mind that there’s no reason to start completely over with a 15 or 30 year loan when refinancing. Start where you left off with an old loan, and go from there. You may be paying a little more each month, but it will drastically reduce your total loan payments.
Sometimes people will go buy something big in anticipation of the savings they will be getting from their refinancing. Don’t do this! Or at least wait until after the loan has been closed. Often people are denied refinancing loans because the go spend money they don’t yet have.