How to Refinance a Home in Four Simple Steps

 

Have you read the fine print on refinancing and it looked like rocket science or some archaic form of hieroglyphics? Well, it’s actually much easier than you think! Here is a brief set of steps to help you learn how to refinance a home. Trust me–it’s not that hard, but you do need to follow some requirements and get on the ball with your credit and equity. Let’s tackle this little beast shall we?

How to Refinance a Home Through a Conventional Loan

 

First of all, in refinancing you should keep an eye on your equity, income, and credit like a hawk in the sky. Remember, lenders will wait to make sure your game is on point– like Michael Jordan in the 1990’s. Keeping your mortgage in shape will show the lender that you are able to make the proper payments once you’ve begun the refinance process. If you’ve run into missed payments before you should reconsider your decision until the situation is stable. Also, you’ll need a thorough record from the last two years of your job history, showing how long you’ve been employed and with which company. Another great recommendation is to keep a W-2 on hand and make a copy for your own record. List everything on there and don’t forget the cash gifts you received from grandma. If you decide to refinance, keep in mind that most lenders require at least 10-20% equity in the home and a credit score of 700 and up. You should wait at least 12 months before refinancing to build up a solid credit score and equity percentage in the home.

Refinance Quicker with a Streamline Option through FHA Financing

If you are still wondering how to refinance a home quickly the FHA refinance is a solid option. Do you ever just want to jet through the barricades and get right to the point? The FHA Streamline Refinance provides a good solution for the homeowner who wants to lower his monthly mortgage. One thing to look forward to is a faster application process and you wouldn’t have to go through an appraisal on your home. You may have to take on a higher interest rate to make up for the lower mortgage though and you cannot get cash from the equity in the home with the refinance. On the plus side, a federal lender will let you refinance the home at a 3.5% equity and a credit score of 580. An equity of at least 10% and a credit score of 700 is typically accepted in a conventional loan. It cuts down on a lot of time because less responsibility for the lender means less responsibility for you in a federal refinance option.

Expand Your Choices in a Federal Cash Out Refinance

 

You’ve probably heard it said “the greater the risk, the greater the reward”. The risk of a federal cash out refinance? Your pocket. You could end up spending a lot more in fees than you originally anticipated. Not to mention you would also have to replenish your equity after cashing out by tacking on a higher interest rate. For some homeowners this presents much more of a hassle than a solution but for others the reward can be great– if they have gusto to follow a couple conditions presented by the lenders. First, lenders will want to appraise your home and see what kind of value it presents. If you’ve noticed that some items are outdated, an appraiser will easily notice. It can get very pricey because not only would you have to pay an appraiser to check out your home but you’d certainly have to dish out some money towards the repairs. And don’t forget the second appraisal; this means more money spent. While getting an appraisal seems like a downer it may bring more value to your home. Why? Updated appliances like a new air conditioner, washing machine, or dishwasher can certainly add value. Building more value inside of your home can translate to a hire cash sum from refinancing. Not to mention you would have more choices on standby for your cash out refinance. With a cash out refinance, homeowners can reap the rewards in several ways: setting up an emergency fund for the future, investing in a second property, pay for school, or even finance a dream vacation. If you choose to do a cash out refinance it’s okay to treat yourself to a vacation but first focus on your priorities like school and car expenses.

Find Lenders Who Can Provide the Best Advice for the Market

One lender should not be the deciding factor for your future progress so consider multiple lenders that deal with conventional and federal refinances– this way you can make a well rounded final decision. Ask yourself which refinance “Will this refinance provide optimal results even after the market changes in a positive or negative manner?”. You will want to know what refinance rates will work best for your 15 or 30 year plan. By researching each financial option you’ll find out how to refinance a home like it’s second nature. Take this valuable information to put you on the right path toward a prosperous mortgage.

Treat refinancing as a course that can help you make great decisions for your home. Whether you use the money to add value on the home or another avenue, it’s important to find out the “how to’s” of refinancing. You’ll find it much easier than you thought if you can simplify the methods to better your mortgage.

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