Collect Personal Information
The first step in the refinance process is for you to gather your income and asset documentation. In order to complete the full application, you will need to collect information for your most recent 2yrs of employment history, assets and debts. You will need addresses for anywhere you have lived for the past 2 years.
Complete A Loan Application
Meet with your lending advisor in person for best communication or you can complete the application over the phone if necessary. It is important to meet the lender you will be working with so you can see their operation and how they conduct themselves. This will ensure you are dealing with a mortgage professional and not some telemarketing agent. Your credit will be checked and your application will be analyzed for pre-approval. However, for a solid pre-approval the lender will require income and asset documentation to validate your application and make sure that everything is in good shape. This may include copies of your most recent pay stubs, 2 most recent bank statements as well as your W2 forms from all employers for the previous 2 tax years.
Title Insurance / Escrow
Once your loan has been pre-approved, your lender will open an account with a title insurance/escrow company who will coordinate your transaction. This company will order payoff statements for any current mortgages on the property as well as conduct a title search to ensure that the title is not "clouded" by liens which could supersede the lender’s interest in the property. Be aware that a title insurance policy for a refinance is much more costly than when purchasing a home. This is due to the fact that you are now acting as the buyer and the seller of the property, therefore paying the entire fee.
Appraisal
The next step in the refinance process is to have the home appraised. An appraisal will give you the fair market value of the home and give the lender a good indication of the property they will be mortgaging. Before the appraisal is ordered, you will need to submit a check to your lender to cover the cost of the appraisal. Typically, the cost for an appraisal for refinancing purposes is $350. For Government or investment property loans, the fee can be $400.
Home Owner’s Insurance
You will also need to provide your lender with the name and phone number of the insurance agent providing your home owner’s coverage. Your insurance agent will then issue an insurance binder with the new mortgage companies name as beneficiary.
Underwriting Submission
Once your loan package is fully documented in the manner that your lending advisor feels is complete, it will be forwarded to an underwriter for a full review. The underwriter represents the lender in that the loan meets all qualification requirements and is not too high of risk for the lender to take on. They will review the file and condition for more items if necessary. Once your loan is approved, standard conditions may be verifications of employment and assets, an earnest money agreement (real estate contract), or letters of explanation regarding changes in employment, late credit payments and other situations.
Submit Conditions
Once all of the outstanding conditions that the lender has requested have been received, they will be submitted to the underwriter for full final approval.
Loan Document Preparation
Once the underwriter has reviewed your file and signed off on all conditions, your loan is given authorization to have the loan documents drawn. Once the loan documents are prepared, the lender forwards the documents to the title & escrow company to arrange a signing appointment.
Signing
Once the escrow company receives your loan documents, they will review them and work up the final figures. They will then contact you to schedule a signing appointment and tell you the exact amount of money you will need to bring to closing or the estimated amount you will receive after closing. At your signing appointment you will need to bring a photo ID, and a cashier's check for the amount needed to close. Once you have signed all of the loan documents and given the escrow officer the cashier’s check, the escrow officer will repackage your loan documents and return them to the lender.
Funding
Once the lender receives your loan package, they will review the documents to ensure that all were signed correctly.
With refinance transactions, the government requires a 3 day right of revision period from the time you sign your loan papers, to allow you time to consider the final transaction. That means that if you sign loan papers on Monday, your loan can’t actually record and fund until Friday. If for any reason you are dissatisfied with the transaction after studying the final figures, you can cancel the transaction during the three days following your signing.
Once the title/escrow company receives the funds from the new lender they will order funds to be transferred to your previous mortgage company to payoff your existing loans and record the transaction with the county thereby completing the refinance process.