January 26, 2021
With interest rates at an all time low over the last few months, it’s likely that you’ve heard from at least a few people that now is a good time to refinance your mortgage. And they’re right! With rates this low it’s worth looking into. If you decide that refinancing is a smart choice for you, here are five tips to help ensure you have a successful refinance.
- Determine the purpose of your refinancing
Paying your loan off faster, lowering your monthly payment, locking in a lower interest rate—these are all popular reasons for wanting to refinance your mortgage. Determining what YOU hope to achieve through refinancing will help you stay on track and complete the process faster. You’ll be able to present your lender with a plan and be on your way.
- Choose a lender that fits you best
You don’t necessarily have to use the same lender to refinance that you used for your original mortgage. Do your research to find a lender that you feel comfortable with, while taking into consideration their rates, fees, and experience with refinancing.
- Get your financial documents ready
You’ll need to gather several different financial documents in order to keep the process moving quickly. Most lenders will require the following:
- W-2’s for the past two years
- Tax returns
- Current monthly mortgage statement
- Copy of your homeowner’s insurance policy
- Title insurance
- Bank statements for the last 60 days
- Pay stubs for the past month
Don’t forget that if any other people are on the mortgage, they will need to have these documents handy, as well. Download our Home Loan Financial Documents Checklist to keep you on track.
- Make sure your appraiser can easily document your upgrades
Many lenders will have you get a new appraisal on your home to account for any changes in value. There are lots of different updates that can increase the appraisal value on your home: sprucing up the front lawn, painting your shutters, replacing the windows, adding new ceiling lights, etc. It’s important that you keep track of all the upgrades you’ve done since you’ve owned your home. Make sure the appraiser can document these and if possible, be present at the appraisal so that you can show them a list of your documented upgrades.
- Anticipate closing costs
Refinance closing costs can include things like:
- Appraisal fee
- Inspection fee
- Application fee
- Attorney’s fees
- Title insurance and title search expenses
- Discount points
Anticipating these costs upfront and being prepared to cover them out of pocket will save you stress and time in the long run. However, some lenders can give you the option of rolling your closing costs into your loan amount. But be advised, this will cause you to pay more in interest over the span of your loan. If the burden of your closing costs is the only thing keeping you from a beneficial refinance, you should look into the option of rolling them into your loan.
Refinancing your mortgage is a great option for many different situations and these tips can help the process go off without a hitch. If you are interested in refinancing your home, our Spirit Mortgage team is knowledgeable and ready to help. Learn more and apply online today at www.spiritmortgage.net.