Refinancing
1.) Collect Personal Information
The first step in the refinance process is for you to gather your income and asset documentation. In order to complete the full application online, you will need to collect information about your current mortgage, your employment history, assets and debts. You will need addresses and phone numbers for every employer you have had over the past 2 years. You will also need to gather account statements for all assets and liabilities for all borrowers. You will be faxing or e-mailing these documents to me.
2.) Apply Online
Once you have collected your personal information, you can complete the entire application process online from the comfort of your home at any time, day or night. Once your online application is received, your file will be reviewed by me to determine the most effective program for your situation. I will then be contacting you to discuss your mortgage options and preferences. Expect to receive a call and e-mail from me that same day.
All loan programs require income and asset documentation before underwriting can take place. This may include copies of your most recent pay stubs, 2 most recent bank statements, copies of your drivers licenses as well as your W2 forms from all employers for the previous 2 tax years. Self employed borrowers will also need to provide copies of their complete tax returns (with all schedules) for the past two years..
Once your loan package is ready for submission, I will send you a complete initial disclosure package for your review that will include a completed loan application, Good Faith Estimate and Truth in Lending Disclosure. The loan will then be sent to the lender offering the best interest rates and fees for the program you desire. The lender then underwrites your file and notifies us within 48-72 hours. While most loans are approved subject to additional conditions, some loans may be declined due to credit or employment history or high debt to income levels. Typically however, we will know if there are any issues prior to loan submission and we should receive an approval as expected.
3.) Title Insurance / Escrow
Once you have submitted your initial loan package, I will open an account with a title insurance/escrow company who will coordinate your transaction. This company will order payoff statements for any current mortgages on the property as well as conduct a title search to ensure that the title is not “clouded” by liens which could supersede the lender’s interest in the property. Be aware that a title insurance policy for a refinance is much less costly than when purchasing a home. This is due to the fact that you are now only reinsuing the property for the new lender. You existing owner’s policy will not have to be renewed.
4.) Appraisal
The next step in the refinance process is to have the home appraised. While you may have a good idea of what your home is worth, an appraisal will give you the fair market value of the home. This is extremely important when refinancing because loan to value ratios are extremely important. If your purpose for refinancing is to take some cash out of your property, you may be limited to a loan to value ratio of 75% with some lenders and 80% with others. For those simply looking to lower their interest rate and payment, most conventional loans allow your new combined loans to be as high as 90% of the appraised value although a few lenders do allow loan to value ratios as high as 100%+.
Before the appraisal is ordered, you will need to submit your credit card informing to me to cover the cost of the appraisal. Typically, the cost for an appraisal for refinancing purposes is $400-$500. I will provide you with a form to complete your credit card information and deliver to me.
5.) Approval / Additional Information
Once your loan is approved, the lender will notify me as to any change in terms (i.e. loan program, term or interest rate) and let me know what additional conditions are required before they can prepare the loan documents. Standard conditions include verifications of employment and assets, appraisal, preliminary title report, homeowners insurance binder, as well as letters of explanation regarding changes in employment, late credit payments and other situations.
6.) Verifications
Some loan programs require verifications of rental history, employment, and assets (such as investment and banking accounts) in order to certify that the information that you represented is accurate. Once your loan is approved, my processor will send verifications out to your employers, banks, and current mortgage company if necessary.
7.) Home Owner’s Insurance
You will also need to provide me with the name and phone number of the insurance agent providing your home owner’s coverage. Your insurance agent will then issue an insurance binder with the new mortgage companies name as beneficiary.
8.) Submit Conditions
Once all of the outstanding conditions that the lender has requested have been received, they will be submitted to the underwriter for approval. The final underwriting process usually takes about 72 hours, depending on how busy the lender is at the time.
9.) Loan Document Preparation
Once the underwriter has reviewed your file and signed off on all conditions, your loan is given authorization to have the loan documents drawn. This usually takes 24-48 hours. Once the loan documents are prepared, the lender forwards the documents to the title & escrow company to arrange a signing appointment.
10.) Signing
Once the title & escrow company receives your loan documents, they will review them and work up the final figures. They will then contact you to schedule a signing appointment and tell you the exact amount of money you will need to bring to closing (if applicable) or the estimated amount you will receive after closing. At your signing appointment you will need to bring a photo ID, a cashiers check for the amount needed to close, and any additional documents that had been asked to bring to closing. This may include updated pay stubs, letters of explanation as well as any other original document bearing your live signature.
Signings usually last between 30 minutes to an hour for refinance loans, so be sure to arrange daycare and plan your schedule accordingly. Before you leave the signing appointment, you will receive a complete package including copies of all of the documents you signed at the appointment.
Once you have signed all of the loan documents and given the escrow officer the cashier’s check and outstanding conditions, the escrow officer will repackage your loan documents and return them to the lender.
11.) Funding
Once the lender receives your loan package, they will review the documents to ensure that all were signed correctly. They will also review the file to ensure that all conditions have been met. Once they are satisfied that all conditions have been met, they give the loan final approval and order the funds to be wired to the title/escrow company.
With refinance transactions, the government requires a 3 day right of revision period from the time you sign your loan papers, to allow you time to consider the final transaction. That means that if you sign loan papers on Monday, your loan can’t actually record and fund until Friday. If for any reason you are dissatisfied with the transaction after studying the final figures, you can cancel the transaction during the three days following your signing.
Once the title/escrow company receives the funds from the new lender they will order funds to be transferred to your previous mortgage company to payoff your existing loans and record the transaction with the county thereby completing the refinance process.