Steps For Stress-Free Refinancing
As mortgage rates continue to creep up, Florida home loan refinancing could be an option worth considering — especially if you have an adjustable-rate loan that is on the verge of resetting.
That being said, there are four basic steps you can take to gain an edge over other applicants and to make the loan refinancing process run a lot more smoothly in general.
Here is your basic checklist:
- Know why you want to refinance
- Provide paperwork promptly
- Lock the rate quote long enough
- Keep in touch, just not too much
STEP ONE: KNOW WHY
The first step, figuring out exactly why you want to refinance a Florida home loan in the first place, is your essential starting point.
Getting a home loan is like buying a vehicle, in that you may have a ton of choices, but only some of them seem right for you. Depending on priorities, the salesperson at a car dealership might recommend a sedan, pickup truck, sports car or gas-guzzling SUV. Likewise, different types of mortgages meet a variety of consumer needs.
Do you want to lock in to a fixed-rate loan because your adjustable-rate mortgage is about to make things very unpleasant? Do you want to refinance so you will have the lowest possible monthly payment? Pay off the loan quicker? Get some cash by borrowing more than you currently owe? Do you want to get rid of mortgage insurance altogether?
It helps if you can guess how long you’ll be in the house.
The more prepared the refinance applicant is, the more a lender can give them in terms of advice and counsel. That’s the bottom line when it comes to narrowing down the mortgage products and accomplishing financial goals. Some Florida home loan providers carry up to 80 mortgage products; various fixed- and adjustable-rate loans for an assortment of periods.
Most brokers and lenders can offer dozens of mortgage options, depending on your goal in all of this. Many homeowners nowadays want to refinance to get a fixed-rate locked in. A few years ago, the goal would have been to get the absolute lowest possible payment, but that probably meant an interest-only loan — probably not a good fit for you under current market conditions.
A mortgage that adjusts monthly or annually will sport a rock-bottom rate, but as we’ve talked about many times, that’s not necessarily advisable. A “hybrid ARM” — an adjustable-rate mortgage with a low introductory rate that lasts a certain number of years (3, 5, 7, 10) then adjusts annually thereafter, is also a way to get a low rate if you are sure you will move in that time frame. If you aren’t sure, then a fixed-rate is probably the route you should take.
STEP TWO: BRING THAT PAPERWORK
When you apply, ask your Florida mortgage lender for a list of exactly what documentation and information you must provide to prepare for the mortgage process.
The list varies depending on the company and your application, but if you are applying in person, you can bring bank statements, tax returns, pay stubs, and other critical paperwork that establishes your income. Unless you opt for no doc loans, which carry their own set of drawbacks, any kind of mortgage will require income verification. If working with a remote lender, try faxing or e-mailing scanned documents if you can, and sending bulky hard copies by overnight mail.
Refinancing customers often forget two critical pieces of information, in that they forget to bring in their insurance documents. This is a huge problem, especially in Florida in 2006. Borrowers should, at the very least, have the name of their insurer and their policy number. Lenders often want to verify the last two years of each applicant’s employment, which trips more people up than you might think. If you got a new job in the past two years, bring the contact info of your previous employer.
STEP THREE: LOCK AND LOAD
Many lenders are telling peoples that their Florida home loan refinance applications will take up to 60 days to close. Other lenders stretch the estimate to 90 days. With home loan rates edging higher constantly, make sure the lock period extends at least up to the lender’s estimate of how long it will take the loan to close.
It often takes a long time not only because loan offices are busy, but also because appraisers are swamped. So are title agents and attorneys.
STEP FOUR: STAY IN TOUCH, BUT KNOW WHEN TO BACK OFF
With the delays and the worries over paperwork, not to mention rising Florida home loan rates, borrowers get understandably get a little antsy when they don’t hear from their lenders for awhile. They want to know what’s going on with their loan. So they call. A lot.
Yet this probably doesn’t accomplish anything other than annoying the person you need on your side. Discuss with the Florida home loan provider or the mortgage broker how often you want to be contacted, even if only to hear that he/she is waiting for the appraiser to visit the house or has not heard back from the title attorney.
If you want a phone call every Friday, or every time something significant happens, assert yourself. Otherwise, you are going to feel as if you are awkwardly dating your lender/broker. Do I call? Why didn’t he call back? Does he still like me? Not exactly the way you want to get refinancing done. Lay the ground rules early!
