When you refinance your existing mortgage, you are essentially paying off the existing mortgage debt and replacing it with a new loan.  Many of the same costs are involved in refinancing a loan as are when you first financed it.  Brokers offer wholesale loans because they are able to work with several different lenders to find the loan that best fits your individual situation.  Whereas, a bank offers loans only as their own loan product at retail.  Additionally, brokers are required to fully disclose their fees so there are no surprises.

To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one).  They will also need information regarding all of your debts and assets, including your existing mortgage.

In order to expedite the paperwork process, start gathering the following items:

• W2′s from the last 2 years (For borrower and co-borrower, if you filed separately)
• If you are self-employed, bring signed copies of your last two year’s tax returns, including all schedules that were filed, and a profit/loss statement or balance sheet for the current year.
• Homeowner’s insurance company name and number
• The original lender’s contact information
• Most recent bank statements (2 months:  include ALL pages, even if they’re blank)
• Most recent statements from 401Ks, IRAs, mutual funds and securities accounts (1 month)
• A copy of your current mortgage statement for your existing loan, along with with the outstanding mortgage balance and escrow, if applicable.

What costs are involved?

There are no-cost and low-cost refinance loans available, and some or all of the fees and closing costs may be waived with these types of loans.  This is a brief rundown on fees that could be associated with a refinance loan:

• Appraisal Fee- This determines the current value of your home.
• Credit Report- The fee the lender charges to pull your credit report (more comprehensive than a consumer credit report, such as www.freecreditreport.com).
• Title Search and Title Insurance- You may be able to get your current title company to reissue a new policy if the lender will accept it.
• Survey- The lender may order a property survey to document the current status of the land your property is on.
• Loan Origination Fee- A fee paid to underwrite the loan which can be paid by the borrower or the lender.
• Discount Points- One point is equal to one percent of the loan amount.  You may want to pay discount points to secure a lower interest rate.
• Miscellaneous Fees- VA and FHA loans may have fees associated with them.  Private mortgage insurance (PMI), document preparation fees, notary fees and tax service fees may also fall under this category.
• Prepayment Penalty- If your existing loan carries a prepayment penalty clause, you will have to pay a percentage of the outstanding loan amount for paying the loan off early.

Just as with your original loan, your lender will be required to provide you with a Truth-in-Lending Statement that outlines the fees associated with your new mortgage loan.  Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your long-term goals.

Call or email me directly for a free consultation.

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Categories: Refinance