Financial Foundations: Understanding the Process of Refinancing Real Estate

July 20, 2018

If you are thinking about refinancing your home to get a better interest rate, or even to pull out some cash, you may think you know how to get through the process. You have, after all, already gotten a mortgage once before, so a refinance should be basically the same, right?

Well, not exactly.

While many of the steps are similar, there is more to this process to be aware of. The following is an outline of what the refinancing process will be so you can be sure to be prepared.

Gathering Information

When working with a financing company to refinance, you will need to provide them with a lot of information. Gathering as much of it as possible ahead of time will help to streamline the process. To start with, you’ll need to provide personal information such as verification of your income, your employment history, details on your debts and assets, and account information for savings and checking accounts.

Next, you’ll need to provide information about your current mortgage. This would include your monthly mortgage payment, the outstanding balance, the status of your insurance premiums and taxes, and more. The mortgage company will also want an up-to-date appraisal of your home as well as having a current title search performed. In some cases, they may also require a site survey to be performed, though depending on how old it is, the one from your original purchase may be sufficient.

Know Your Costs

While most people refinance their home in order to save money, you’ll have to pay for it up front. There are a number of different fees that you’ll need to cover in order to qualify and close on your refinance deal. The following are the most common types of expenses associated with refinancing a mortgage:

• Application Fee – This is the cost of applying for refinancing. This is intended to cover the costs of the processing the application.
• Appraisal Fee – Expenses related to getting your home appraised.
• Loan Origination Fee – A fee that is typically based on the total amount of the loan to pay for the lender’s work.
• Title Search Fee – Any expenses related to the title search.
• Pre-Payment Penalty – If your current mortgage has a prepayment penalty you will need to cover those expenses.
• Other – Depending on the specifics of your refinancing experience, there could be other additional costs.

Get the Help You Need

There is no doubt that refinancing your mortgage is a big decision. When done properly, it can save you thousands of dollars over the life of your loan. To ensure you are going through the process properly and getting the best possible results, it is a good idea to have an attorney working on your behalf throughout the refinancing process. Contact us to get the legal help you need to successfully refinance your home today.