The steps to refinancing a mortgage are relatively straightforward once you get past all of the legal-jargon and bank talk. You will still need to understand what you are doing of course and we are here to assist you in comprehending the mumbo-jumbo before you put pen to paper and sign on the dotted line.
There are essentially four steps involved in obtaining a mortgage loan:
Step one: Fact Finding and pre-approval process.
- How much do you earn?
- How much do you spend?
- How good is your credit?
- How much is your current mortgage loan balance?
- How much do you estimate your home’s current value?
You will have to authorize us to run your credit score and report.
We will than need to collect your personal financial paperwork including the last two years tax returns, last six days banks statements and other assets along with your last pay stubs and more.
Step two: complete the application process
This is assembling all your paperwork in putting it on Form 1003 (A Fannie Mae form) with all your credit report information. From here we will have all your disclosures ready to sign including a “Good Faith Estimate” Once this is completed we will run DU* this is a pre underwriting gauge that helps guide us to get any other additional information that the underwriter may be looking for you specific situation.
Step three: Submission to underwriting!
Once we have completed the bulk of the standard paperwork your file will be submitted to the underwriter for review and conditional approval. Yes conditional approval. I believe in waiting until your file comes back from the underwriting to see the conditions for approval before ordering an appraisal or survey if needed. Once we see the conditions and we are fairly confident that we can satisfy the conditions we will than order the appraisal and survey. Remember appraisals and surveys are paid by you the applicant whether you close on the loan or not.
Step four: Clear to close and funding
The last step here is to satisfy the conditions for closing outlined by the underwriter. Once all the satisfied conditions have been sent to the underwriter for final review and approval, the underwriter will send us and the closing attorney (title company) the CTC, Clear to Close. Upon receipt of the CTC closing Documents will be ordered and coordinated with the closing attorney with a time for closing on your new refinanced mortgage loan.
So that’s it! A simple four step procedure to raising a mortgage on your home which has been designed to remove the stress and misunderstandings commonly associated with refinancing your Home.
For further information about getting the right mortgage for you and to arrange your ‘NO-FEE evaluation’ call us on 941-223-9416 Or simply fill in your contact details in this form.
* DU is Desktop Underwriting program of Fannie Mae, similar is Freddie Mac’s LP and GUS from USDA. These automated programs give the mortgage broker or lender basic eligibility guidelines for that specific borrower. A report of Approved/Eligible with conditions is what the lender or mortgage broker is looking for. If we do not see this Approved/Eligible we need to find out why not and see what the potential borrower would need to correct or overcome in order to get an Approved/Eligible to continue working on the loan process.
Under the Ability to Repay Rule
Prior to 2010, lenders more often allowed mortgage loans to consumers who could not truly afford them. Under the Ability-to-Repay rule, all new mortgage loans must meet the basic requirements that will help prevent consumers from taking on loans that they cannot truly afford. This is to benefit both the consumer and the lender. Some of the features of the new rule are:
:: All financial information has to be supplied and verified: Lenders must review and verify a consumer’s financial information. A lender must document and verify: a borrower’s employment status; income and assets; current debt obligations; credit history; monthly payments on the mortgage; monthly payments on any other mortgages on the same property; and monthly payments for mortgage-related obligations. This rule has put a stop to all no-doc, low-doc loans, in which lenders are forced to underwrite better and more responsible mortgage loans. Hence hoping to lower the risk of foreclosure, bankruptcy or other negative debt or credit impacts on the consumer.
:: All borrowers have to have sufficient assets or income to pay back the loan: Lenders must verify, evaluate and conclude that the borrower has the ability to repay the loan. As an example; Lenders may calculate the consumer’s debt-to-income ratio. This is their total monthly debt divided by their total monthly gross income. Verifying how much income a consumer has and is expected to have, and knowing how much currently owe, helps a lender determine how much more debt a consumer afford.
:: Teaser rates can no longer mask the true cost of a mortgage: Lenders must calculate the consumer’s ability to repay on both the principal and the interest over the long term – not just during an introductory period when the rate may be lower.
If you have any questions or would like further assistance please contact us directly and we will try our very best to help wherever possible.
For further information about getting the right mortgage for you and to arrange your ‘NO-FEE ASSESSMENT’
CALL US on (+1) 941-223-9416