A homebuyer gets a mortgage in order to pay for the home. The money goes directly to the home seller. When you refinance a home, you get a new mortgage. This time, it does not go directly to the home seller. The newly acquired mortgage pays off the balance to the old home loan.
Fast refinance requires you to qualify for the loan and the lender’s requirements. You shall undergo an application, underwriting process and then closing. Works pretty similar just like buying your first home.
Alexdoesloans is very committed in providing easy and fast refinance options that can help you understand them and guide you towards your financial goals.
Rates can fluctuate daily, so when you refinance from an adjustable-rate to a fixed-rate mortgage, you can enjoy a consistent, stable payment in the foreseeable future.
Refinancing cannot only help you own your home sooner but save thousands on interest charges too. This could give you financial benefits such as confidence and flexibility in doing other things you want.
You could save up more money for other things when you refinance your mortgage at a lower rate. For instance, you may save up for travel, school funds, and other day-to-day expenses.
WHY DO PEOPLE REFINANCE?
Tips & Tricks For Fast Refinance
Determine Your Current Credit Score
Before applying for a fast refinance, it is ideal to determine your exact FICO Score. Credit score plays a vital role in determining your interest rate as well as the loan types you can qualify for. Looking at your credit reports can help you find out your credit score.
Credit reports and credit scores are issued by three major reporting bureaus – Experian, TransUnion, and Equifax. Companies you have credit cards or loans may not be reporting to all the said bureaus, so it can affect your scores. As opposed to what we believe, credit reports aren’t identical. Make sure to validate your report before applying for refinance. Failure to correct any mistakes may lower you score and impact your chances of a refinance.
Even after you went through bankruptcy, you can still apply for a refinance. Refinancing after bankruptcy is possible as long as you have the requirements such as improved credit score. Make sure to pay your bills on time, minimize utilization of cards, and wisely plan your expenses.
Understand Your Equity
If you are a Texas mortgage borrower who is considering a cash-out refinance, you need to know how much equity you currently have in your property.
Equity refers to the percentage of your home that you’ve paid off and own free & clear. Every time you pay your mortgage loan by paying down some of your principal balance, you build loan by paying down some of your principal balance, you build equity. By making a cash-out refinance, you can turn some of this equity into cash. Most likely, homeowners opt for cash-out refinance when need to pay off debt or cover repair costs since mortgage interest rates are lower than other types of debt. Expect that you will be able to borrow a maximum of 80% – 90% of your home equity. Most of the mortgage lenders do not allow borrowers to borrow 100% of their equity with a refinance.
You may request a mortgage statement if you have no idea how much equity your home has.
Take Note of The Closing Costs
Part of finalizing the refinance is paying off the closing costs. A lot of factors could impact your closing costs like the place where you are residing, and the ones below:
- Application Fee – An application fee may be required by the lender upon submitting a request for refinance. Regardless of getting approved or not, you still need to pay for it.
- Appraisal Fee – Before getting a refinance, your lender will require this. It assures your lender that your property value has not gone down from the day you bought the home. Furthermore, it assures your lender that they are not lending you more than your home’s worth.
- Inspection Fee – There are certain home inspections buyers should be aware of. Special inspection in some states must be done prior to closing a refinance. You might also need to get an inspection before qualifying for certain types of government loans.
- Attorney Review & Closing Fee – Mortgage borrowers pay lenders for reviewing the refinance documents before closing in some states.
- Title Search & Insurance – If you refinance with a new lender who did not service your old loan, you may need to pay another title search. Also, an insurance may need to be paid again. Insurance protects you and your lender against other claims to the party.
Closing cost is around 3% – 6% of your purchase price. Ensure you can cover these costs before applying for a refinance.
Explore Mortgage Refinance Options
No-Closing-Cost Refinances
If you cannot cover those expenses, your mortgage lender might offer you a refinance with no closing costs. The lender will waive your immediate closing costs; however, you will need to take on a higher interest rate in exchange for this convenience.
A no-closing-cost refinance might seem like a great deal but take note that you will end up paying more than this over the course of your loan. Closing costs can be $4,000 to $6,000 on a $200,000 fast refinance.
Let’s say you want to refinance with a 30-year term amounting to $150,000 loan and a 3.5% APR. You will also be required to pay $4,500 for your closing costs upfront. The lender will offer you a no-closing-cost refinance with $0 in closing costs but a 4% APR. Therefore, you will pay $92,484.15 in interest over the course of your loan if you pay your closing costs upfront.
On the other hand, if you opt for a no-closing-cost refinance, total of $107,804.26 will be paid in interest by the time your loan matures. Only half percentage point of difference causes you to pay over $10,000 more for your loan than you would if you settled with the closing costs for refinance.
Make sure you do calculations before you take a no-closing-cost refinance.
Make Upgrades Easy to Find
The lender can order an appraisal to ensure your home’s value matches up with your new loan. The type of upgrades you have added to your home influence the value of your property. Certain upgrades might be hard for an appraiser to spot on their own, so make sure these upgrades are easy to find.
It’s ideal to be present during the appraisal and useful if you can give a list of all the permanent upgrades you’ve made to your property. You may include receipts from contractors, as well as estimates and permits, if applicable. Don’t be hesitant to walk with your appraiser and pinpoint all the additions you have made as it will help increase the overall value of your property.
Prepare Yourself for A Successful Appraisal
Your appraiser assigns an estimated property value to your home during appraisal. Most likely, the value is higher than what you paid for the home. If the appraisal comes back low, you may need to adjust the amount you are asking for a refinance.
Below are the things you can do to get a successful appraisal.
- Make a Research – It is best to make research on local properties similar to yours. Then, you can present a list of recent sales to your appraiser to see how property values are trending in your area.
- Tidy Up Your Exterior – Your property’s exterior influences the overall value. Before the scheduled appraisal, take some time to make your property look great.
- Make Your Home as Comfortable as Possible – Making your home comfortable can influence the appraiser’s assessment. Do some home cleaning and remove anything that might negatively impact your appraisal.
Be Responsive to Your Lender
Even a fast refinance can take 30 to 45 days. Respond to any inquiries from your lender as soon as possible to ensure everything goes well. Additional documentation may be required to support your credit, work, or financial history during underwriting.
A closing disclosure will be issued once underwriting is finished. It includes the final terms of your loan, closing costs, interest rate and more. At least 3 days will be given for you to review your disclosure. Also, remember to acknowledge that you have your closing disclosure as soon as you receive it.
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Conclusion
There are couple of refinance tips and tricks to ensure a smooth, fast refinancing experience. Know your current financial situation, understand your mortgage refinance options, and stay in touch with your mortgage lender.
Get fast refinance started with Alexdoesloans! Get pre-approved today without credit check required.
