What is the process of refinancing a mortgage?
The process of refinancing is like that of a new purchase but varies based on the lender. Ours is as follows:
1. Initial communication. Either by text, email, or phone conversation, a discussion of goals happens to present the proper proposal.
2. Proposal. A proposal is issued to present the new principal and interest mortgage payment based on the home loan. Based on your goals vs the proposal, you would give the go-ahead to proceed with an application.
3. Disclosures are sent and returned. Disclosures are usually sent and returned, often electronically, along with supporting documentation requested to confirm income and other details.
4. Processing. Once the disclosures are returned, appraisal, title, and payoff of the existing mortgages are ordered. In this stage, we would address any concerns and discuss locking the rate on your home loan application.
5. Underwriting. Once the appraisal, title, and payoff are received, they are reviewed for quality. The file is then submitted to underwriting where the documentation is reviewed for the program. There are usually a few outstanding conditions requested to be updated.
6. Clear to Close. Once all supporting documentation is cleared, the final approval or “Clear to Close” is issued. Then the preliminary closing disclosure or CD is issued.
7. Closing. A closing package is prepared and sent for signature and notarized where required. This closing often takes place in the borrower’s home for convenience. The closing package is returned to the title company for disbursement after a 3-day waiting period. This is called the “recission period”.
8. Funding. After the waiting period, the loan funds. The title company pays off your old mortgage, any additional debts, and the borrower is given any additional funds.
The process of refinancing a mortgage is usually more simple than buying a home. You already live in the home, and you don’t usually come out of pocket for costs. The costs in a refinance are typically rolled into the new loan’s balance.
Remove PMI, Lower Your Monthly Mortgage Payment, or Pay Off Your Home Faster with a ReFi
The time for a home loan refinance is now, and at Homestead Financial, it’s easy with our friendly home loan professionals covering Missouri, Kansas, and Illinois. Homestead Financial Mortgage has been serving home financial help for decades to Missouri, Kansas, and Illinois. Let us help you refinance today.
The Benefits of Refinancing Your Home Loan
Refinancing your home with Homestead Financial is smart and super easy. Homestead Financial is a direct lender, so there are no middlemen, and our mortgage experts are with you every step of the way as you complete the refinancing process, from your initial application all the way to funding your loan.
There are lots of benefits to refinancing, especially now as mortgage interest rates are low.
Lower Your Interest Rate
Interest rates are very low right now, and one of the main reasons people turn to refinancing their home is to lower their interest rate on their existing loan to save them money on the remaining loan term. How much you save depends on how much you can reduce your interest on your loan. A reduction in mortgage interest rates can also decrease how much you pay each month. Lowered interest rates are often the top reason people say inspired them to refinance their mortgage in St. Louis, Missouri; Overland Park, KS; and Godfrey, Illinois.
Get Rid of High-Interest Cards
Another reason to refinance your home sooner rather than later is to consolidate your debt. Using a cash-out refinance allows you to consolidate credit card debt while you make fixed payments over a set period instead of paying a revolving credit card bill payment every month. A cash-out refinance increases your mortgage by the amount of the other debt that you are looking to pay off. This is also known as a debt consolidation refinance; your mortgage interest rate is likely lower than your other debts, like credit cards, so you can potentially save money long-term. Ask your financial professional at Homestead Financial about whether you qualify for a cash-out refinance of your home loan.
Eliminate Private Mortgage Insurance
As you are building up your home equity, you can refinance with Homestead Financial to get rid of your private mortgage insurance, also known as PMI. Eliminating your PMI by refinancing works best if your new mortgage balance is below 80 percent of the home value – that is, you have 20 percent equity in your home. An appraisal can verify that you have at least this much equity in your home. If you do, a professional at Homestead Financial can help you remove the PMI charge via a mortgage refinance. What will you do with an extra $60 to $120 each month?
Convert to an ARM or Fixed-Rate Mortgage
Another great reason to refinance is to change your mortgage from an ARM to a fixed-rate mortgage, or the other way around. An ARM is an adjustable rate mortgage and usually has a lower monthly payment than a fixed-rate mortgage. If you choose to refinance to go from an adjustable-rate mortgage to a fixed-rate mortgage, you can potentially see a lower interest rate and also eliminate any concerns over future interest rate hikes, or take advantage of a lower interest rate for the next few years.
Especially if you intend to sell your home and upgrade to a larger one, an ARM may be a good option for you. Deciding which type of loan would best benefit you would be a good thing to discuss with your Homestead Financial loan professional that will be working with you on your mortgage refinance.
Renovate Your Home or Pay College Tuition
When you choose the cash-out option when refinancing your home, you don’t add another monthly payment to your list of bills. Instead, your refinance essentially pays off your old mortgage and replaces it with a new one. A cash-out refinance gives you cash in exchange for the equity you’ve built in your home.
Bottom line, by choosing the cash-out refinance option, you will borrow up to the current value of your home and pocket the difference. The extra cash in your pocket can help with home improvements that will help build your equity on your home, making it easier to sell or increase future appraisal rates. You can also use your cash to pay for college tuition or other important expenses.
Refinancing Your Home with a Mortgage Lender Requires an Appraisal
When you are thinking about refinancing, knowing how much your home is worth is the most important thing. A licensed appraiser will determine the value of your property, which we’ll use to determine your refinancing options.
During an appraisal, your home is compared to other similar properties that have recently sold in your area. These “comps” help the appraiser estimate the value of your home. The appraiser will verify the accurate square footage of your home, the number of rooms, and the condition of your home – which may have changed if you did any upgrades after purchasing it!
Preparing for your refinance appraisal can help you give a better impression. You should:
- Make sure your lawn is manicured and picked up from debris, toys, clutter, etc.
- Sweep up your porch and make it a welcoming entrance.
- Clean throughout your home and be sure to complete any small home improvement projects or minor repairs you’ve been putting off.
- Organize any clutter you may have in your home. You do not need to stage it, but a cleaner home can sometimes appraise better than one that needs some tidying.
You only get one chance, so make a good impression!
Get Pre-Approved to Refinance Your Mortgage Right Now
Start your pre-approval process right now with Homestead Financial Mortgage’s online pre-approval form. A loan officer will look at your application and get back with you within the next 24 hours. It costs no money to find out your approval status through the online form!
Or, you can call Homestead Financial Mortgage, with locations in Missouri, Illinois, and Kansas, to get started on your home loan refi. Our knowledgeable mortgage specialists are always ready to help you refinance and achieve your goals.
For Missouri residents
14897 Clayton Rd, Chesterfield, MO 63017 | (636) 271-4663
For Kansas residents
8585 College Blvd #110, Overland Park, KS 66210 | (913) 317-1000
For Illinois residents
4215 IL-159, Glen Carbon, IL 62034 | 618-288-7904
3005 Godfrey Rd Ste A, Godfrey, IL 62035 | (618) 980-3860
Or, if you’d rather, you can chat with a friendly financial professional from Homestead Financial Mortgage online. Don’t miss out on today’s low interest rates! These great rates won’t last forever. Start your refinance now.