How to Refinance your Mortgage? - Aria Seif How to Refinance your Mortgage? - Aria Seif Skip to main content

Mortgage refinance refers to taking on a new loan to pay off your existing loan. Refinancing your mortgage can be helpful if you have a higher interest rate on your existing mortgage. With this, you will be able to save money on your monthly payments and will be able to utilize cash-out refinance, which allows you to have a lower-interest loan through your home’s equity.

Only consider refinancing your mortgage if the interest rate is lower by half a percentage point, and it has a shorter term than the current loan’s term. Also, it is important to consider your mortgage lenders, such as a direct lending mortgage, though you may ask “what is direct lending?”. No need to panic, everything you need to know is mentioned down below.

Refinancing your Mortgage

Knowing your Financial Situation

Mortgage refinance can be helpful in many forms, whether it is to shorten your loan’s term, decrease your payment amount, or to obtain home equity. Considering your financial status is important as you would need to clear the qualifications of a mortgage to refinance as you did for the loan in the beginning. You will need to keep your credit score as high as possible while making sure that you are receiving the best refinance rates in the market, all before applying for a mortgage refinance. Although there are ways to apply with a bad credit score, it’s recommended to improve your credit score before applying.

Check out multiple Mortgage Lender and know your Home Equity

You should always check out at least three mortgage lenders and you can also check out direct lender deals. Now to answer “What is direct lending?”, direct lending can be a private entity or financial firm that can provide loans for a mortgage and some specifically provide direct lending investment loans for a mortgage refinancing. With any mortgage lender, whether a bank or private firm, you will need to go through the same process of providing documentation, completing the application, and writing an approval.

Your home equity can also play an important role in mortgage refinancing. To find out your home equity, hire a real estate agent to find the estimated value of your home. Now deduct your home’s net worth from your total loan and you will have your home equity.

Refinancing Process

Preparing all of your paperwork beforehand will only help to smooth out the refinancing process. Collect any tax sheets, bank statements, and anything else that you have been asked to show. One more thing to remember is that your lender will be looking through your credit and net worth, so be upfront about your assets and liabilities.

Once you are done with your paperwork, the next step will be the appraisal of your property or home. The mortgage finance appraisal is done to determine your property’s current market value. You can help yourself by telling the lender appraiser of any improvements or repairs you have made to your property since you have purchased, this could lead to a higher appraisal.

Finalizing your Mortgage

Closing disclosure is the amount you need to pay to close the loan and it is also advised that you do so. Typically you will have to pay few thousand upfronts to close the mortgage, not doing so will result in you paying the same amount now as a part of your overall loan. This can cause the interest rate to rise, hence in a financial opinion, you should the amount if you can.

Finally, securing your loan documents is highly recommended and so is setting up autopay, as many banks will be willing to provide a lower interest rate for it. Also, keep in touch with your mortgage lenders as it is possible that they could sell your loan on the market either after closing or a few years after. This will mean that you will have to pay some other company, so keep in mind to check your mailbox or inbox for such updates.

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