If you wish to refinance your home, the following is an overview of what to expect when undergoing the process.
- Mortgage Banker Appointment: Meeting with a mortgage banker will allow you to review all aspects of your scenario and answer any questions you may have entering the process. This is when you determine the basic goals you wish to achieve by refinancing, whether it is lowering your interest rate, removing mortgage insurance, shortening your term, debt consolidation, or take cash-out. You should determine how long you are going to be holding the loan whether you are planning on selling the property or paying off the mortgage. Take the time to evaluate your monthly savings by lowering your rate vs. the refinancing costs. Review the costs, benefits, and risks of refinancing your home.
- Get Pre-Approved: Get pre-approved for your loan and review the refinance transaction costs and new estimated monthly payment details with a mortgage banker.
- Sign Loan Disclosures & Initiate Loan Process: Once the contract has been signed, you can begin the approval process for your loan. The first step in this process is for you to sign loan application disclosures. Once these disclosures have been signed, there will be a few things ordered on your file: appraisal, title, insurance (if provided), verifications of employment, tax transcripts, etc.
- Application Submission To Loan Processor: This step is where your mortgage banker will work with you in order to gather credit approval documents such as tax returns, pay stubs, and bank statements so they can be submitted to the loan processor. Your documentation will be reviewed as the loan processor will coordinate with the appraisal order, title, insurance, and verification requests so it can be reviewed completely.
- Processing Conditions For Loan Processor: After your file is reviewed, you will be informed of any other items needed prior to being submitted to Underwriting. Underwriters will not review incomplete loan files so it is highly important to pay attention to what is on your list of conditions. If an updated bank statement is requested, make sure all pages are included. Make sure your ID document is scanned or copied visibly. Documents that are scanned or copied must fit within the margins.
- Submission To Underwriting: The loan will be submitted to the Underwriter through the loan processor. It will take between 24 and 72 hours for underwriting to review your loan.
- Conditional Approval/Underwriting Conditions: After the Underwriter has reviewed and approved the loan, you will be sent a list of any additional items that are needed prior to closing your loan. There will be an appraisal follow-up & appraisal acknowledgement disclosure that will be sent to be signed, confirmng you have received the appraisal. If your home is a single family home, you should speak with your mortgage banker during this step to ask whether it is okay to have the Title Company order the survey.
- Underwriting Conditions Review: Once all of the items requested by the Underwriter have been gathered, the Processor will review them to ensure they are what the Underwriter is requesting and determine whether any additional information could help facilitate approval of the loan being requested.
- Updated Closing Costs & Cash-To-Close: You will be given an updated transaction worksheet with closing costs and cash-to-close at this point in the process. This will be updated with any final fees received from third parties involved such as title company fees, insurance premiums, survey, etc.
- Clear-To-Close: Once your loan has been given final approval, it will go through the closing process to be reviewed to prepare for the final closing statement. A draft will be forwarded to you for approval at least 3 days prior to closing.
- Closing: The title company will require a government issued picture ID for each person signing at closing as they are all required to be present. Non-borrowing spouses will be required to sign the mortgage on any primary home and most second home transactions so they would have to be present as well. The transfer of funds at closing should be coordinated in advance. Title Companies will not accept personal checks at closing. Most Title Companies no longer accept cashier's checks due to fraud. Arrange the payment method with your Title Company prior to closing to ensure there are no problems. Make sure to contact your bank a few days prior to closing to confirm the time-frame they may need to approve a wire-transfer if the amount is considered unususal for your account activity.