Whether you are a first-timer at buying homes or looking into a home loan refinance, the task can be daunting if you are not prepared. Here are five tips that will help you glide through the process.
To qualify for a home loan refinance, FHA mortgage, or conventional loan, you will need to fill out a lengthy application. This document helps demonstrate your financial stability. Some of the areas it will cover include your income and debt. Most people think of a regular paycheck as a source of income, but individuals who work gig jobs or receive cash payments can also apply. You should also note your assets, such as stocks, bonds, and retirement accounts, on the application.
According to the experts at SoFi, most home loans refinance packages and other types of mortgages require an appraisal. A neutral third party completes the assessment, and it gives the bank a rough estimate of the value of the property. This way, the loan amount will not exceed the home and land value. The report will also note the condition of the house. If any significant health and safety issues are flagged, the lender may require them to be fixed before closing.
Property owners will need to make sure they have enough insurance on the structure. If it accidentally burns down, the mortgage lender will know that the insurance will kick in and pay for the damages. Insurance is a safety blanket for the owner and lender. A bank needs to see that the insurance covers the cost of replacing the house, and homeowners can add additional coverage to their policy, such as medical liability.
Be prepared for this process to take time. The underwriters must review the paperwork, and they will also verify all of the information on the application. The appraisers might be backed up in your area, or holidays may slow the process down. You might need to provide more documents or write letters of explanation, and these things can take time to retrieve or create. The title company will also pull the title to ensure there are no hidden liens on the piece, so their work must also be factored into the timeline.
When you, at last, make it to the closing table, it is a day for celebration. While waiting for the event, take care not to run up any debt. New charges could throw off your debt-to-income and stop the loan in its tracks. On the other hand, don’t deplete your savings.
Stay in touch with your loan officer. When you meet with the escrow officer, you might need to bring funds to pay for any closing fees. Typically, you must pay these fees with a cashier’s check or a wire transfer. If you are wiring the money, add extra time to the closing. If the lender or escrow company calls you, get back to them as quickly as possible.
A successful refinance or home purchase involves time and a little perseverance, but with some knowledge and help from trusted professionals, the work will be all worth it in the end.