Refinancing a mortgage simply means that you are paying off your old loan by applying for and obtaining a new one. If you are applying to refinance your mortgage, then you will need to provide new and updated documentation and other key information to the lenders to verify that you can qualify for the new loan or in other words, a refinance.
Below is a list of documentation that you have to present to lenders for you to stand a chance of getting a refinance.
- Your employment and income history
- Your credit score and loan payment history
- Your current home appraisal to determine its current value
- Your assets (savings, retirements, and stock savings)
Reasons for applying for a home refinance
You can take advantage of the lower mortgage rates in the market.
If you research the topic, you will realize that the current national mortgage rates are low. It doesn’t matter if you have little equity at the moment on your mortgage. You can still take advantage of some special refinance programs that are being offered around and that will significantly lower your mortgage rate.
More stable monthly payments
You may prefer to refinance from an adjustable rate mortgage to a fixed-rate mortgage to have a more predictable and stable monthly payment.
When the mortgage rate is about to adjust
You may want to start thinking about refinancing to a different ARM, when you have been in the current one for over six years. This can be the best time to refinance your loan.
When withdrawing equity from your house as a cash back refinance
You can opt to do this when you have a significant amount of equity in your mortgage and already paid it off completely. You can even opt to purchase big-ticket items from the cash back refinance. Items like cars and even another house seem like a likely possibility with a cash back refinance.
When attempting to consolidate two mortgages
You may have two mortgages under your name, or even a home equity line and a mortgage. In such events, it is possible to refinance the two mortgages into one mortgage which will be simpler to manage and keep track of.
To put more money down when attempting a cash-in refinance
With a cash-in refinance, you will be able to refinance your home to a lower mortgage rate, have a shorter loan term, or even eliminate your mortgage insurance. All of this is made possible when you put extra money down when refinancing.
There will be a prepayment penalty on your current mortgage
There is always a penalty involved in many existing mortgages after paying them off. What you need to do in such a case is find out if you may be charged a prepayment penalty. This penalty amount usually varies and can always add up to many months’ worth of the interest payments.
Do you have a question about refinancing your mortgage? Click here to contact the Kolesar Team today!