The Home Mortgage Refinance Process
Does refinancing a loan have to be difficult? The answer to that is a resounding no. Yet, the process does become very difficult for many homeowners because they are not aware of what is required to actually refinance their existing loan.
A Deliberate Process
Refinancing a mortgage is deliberate process that requires a few established steps. None of these steps are complicated and the main problem many consumers have is one of omission. That is to say they are not aware of a particular step so they do not follow it, which can lead to delays. Here is a brief look at the main steps:
- Determine why you wish to refinance. You do not want to refinance your loan for the wrong reasons since this could lead to a host of problems in the future.
- Have an idea of what you wish to get out of the refinancing. Are you going from 30 years to 15 years? Do you want a lower APR or an adjustable rate mortgage? Define what you wish to refinance to before moving on to the next step.
- Clearly determine exactly what the cost/benefit ratio is. Will your new monthly payments and interest rates actually deliver a better savings than what you are currently paying? If so then you may be making a step in the right direction.
- Procure quotes from various different lending institutions. You do not want to only get a quote from one lender, or the financial institution that happens to be the closest to you. You want to select from the best mortgage service that will meet your own individual requirements and also offer you rates that are agreeable.
- Review the quotes as deliberately as possible. You definitely do not want to skim the quotes because it is crucial to understand the refinance terms you will be agreeing to. You have to make the best possible decision and that is only possible when the quotes you receive are reviewed in their entirety.
- Make a final decision whether or not to refinance your mortgage. In other words, you have to actually decide whether or not to agree to new loan terms, or walk away and stick with your old one.
- Once you have refinanced your home, do your absolute best to make timely payments each and every month. You do not want to go through the motions only to go into default.
Bad Credit Issues
On a side note, one common problem many people may encounter is a poor credit history leading to problems refinancing. While this may create some hurdles to overcome in terms of finding good terms, it really should not be a total impediment to finding a new deal. You will, however, have to seek quotes from lenders willing to work with you if you have less than stellar credit.
Follow the Terms to the Letter
Once you have refinanced your mortgage, you are now obligated to hold up to your end of the agreement. In other words, make all your monthly payments in a timely manner. As long as repayment is timely, you will find you get the most benefit out of the new mortgage.
Our helpful guide to understanding the home mortgage refinance process will help answer your questions, and ensure you don't leave any stones unturned.
To learn more about the important questions you need to ask in the refinance home mortgage process, start by finding out what options are available to you, and compare them to see which one is the best fit for your particular needs.