The Tip: Refinancing is easy when you're prepared and patient.
With mortgage rates continue to hang out at bargain-basement lows, many homeowners are scurrying to refinance to lower rates and shorter terms. Here's a step-by-step refinancing guide plus a heads-up about the snags you could encounter along the way.
1. The application.First, you need to answer the two most important refinancing questions: Should I refinance from 30 to 15 years? Will I qualify? If you plan to stay in your home long enough to recoup the costs of refinancing, usually 3–6% of the loan amount, it's worth it to refinance. Reducing your term could also increase your monthly payment, so make sure there's room in your budget.
A loan specialist can help you answer these questions and fill out your loan application to get things moving.
2. Credit, income and appraisal.At this point, the lender will review your credit, verify your income, and schedule an appraisal of your property.
Generally, higher scores qualify for the lowest interest rates, so know where your break-even point is.
Tighter lending standards mean lots more paperwork. You'll have to show where your money comes from and that you actually have the funds to close the loan.
Lenders are also more picky about appraisals. An appraisal that doesn't compare your home to another home sold in your area in the last 90 days could be turned down.
The best advice: Start with good information about the value of your home and be willing to provide whatever documentation necessary to get your loan approved.
3. Wait.At this point, the process is out of your hands. Be ready to answer some questions for clarification or provide even more documentation, and keep tabs on the process with your lender.
4. Closing.If your refinance gets the green light, your lender will arrange a closing. You'll have three business days after you sign the closing documents to cancel the refinance if necessary.
Now you're free to reap the benefits of historically low interest rates and a shorter mortgage term!
Ask the Experts If you're planning to buy or sell a home, consult a pro who will help you save time and money. Call or email Matt Smith today! 319-431-5859
Reminder: Changes to HARP Program Announced See If You Can Benefit
Just a note to remind you that in October, President Obama announced plans to open up refinancing to more homeowners who are underwater. This proposal was a revision to the current Home Affordable Refinance Program (HARP).
So what does this mean to you?
This means that if your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:
Fannie Mae and Freddie Mac have recently released details regarding how these changes will be run. If you have any questions at all about what these changes mean or how they could impact you, call or email me anytime. I'm always happy to help.
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