One of the first questions you might ask yourself when you hear mortgage rates have moved lower is how soon can I refinance my mortgage? It’s a legitimate question since a lower mortgage rate would help lower your overall monthly payment. Or there are those who are looking to improve their home by doing a remodel and you hear home values are much higher than when you bough. Can you refinance your mortgage or do you have to wait?
Our step-by-step guide helps you figure out what you need to do to answers these important questions.
How Soon Can I Refinance My Mortgage In California?
How soon can you I refinance my mortgage is an important question to ask and lucky for you there are just a few things you need to know before moving forward on a new mortgage application. Not every situation is the same so make sure you follow these steps to help you figure out if you’re able to refinance. And as I always suggest, if you have any questions make sure you discuss them with your Loan Officer.
Step One – Do You Have A Pre-Payment Penalty?
For those homeowners that don’t have a pre-payment penalty you can refinance at any time after your loan closed (generally speaking; consult your signed loan docs to confirm). Not many lenders have pre-payment penalties these days so if you just bought your home and decided you want to do a renovation or you have an unexpected expense or maybe rates went down…. as long as you don’t have a pre-payment penalty you can refinance your current mortgage. Keep in mind before you make any decisions you need to consult your loan documents to ensure there is no pre-payment penalty.
Step Two – Does It Make Sense To Refinance?
The next step is to decide if a refinance makes sense.
Make a list of the pro’s of refinancing your current mortgage and the con’s of refinancing your current mortgage. Ask questions like: Am I saving enough money per month to justify a refinance of my current mortgage?
Or if you’re getting cash out: Does the cash out I’m getting make sense; and if I have a higher mortgage payment can I afford that? Even if the new mortgage has a lower rate your payment might go up since you are borrowing more money. Once you’ve decided it’s at least worth looking into make sure you obtain your quotes from reputable mortgage lenders. In fact you should find two or three reputable mortgage companies and obtain quotes from each of them. Make sure you ask lots of questions and don’t hesitate to ask for clarification of things that seem a bit confusing.
Step Three – Making The Decision:
If a refinance makes sense than all you need to do is make the final decision to move forward and chose a company to work with. Since all of your quotes are only from reputable mortgage lenders the decision process will be easier. You won’t have to worry if a quote is too good to be true or if the Loan Officer can actually close the loan he or she is quoting. Speaking of Loan Officers; if you are deciding between two quotes that are pretty much the same then I suggest going with the Loan Officer that has more experience. Ideally you want to work with a Loan Officer who has at least five years of experience.
The Refinance Loan Process
If the quotes look good and the new refinance meets your objectives than move forward and get the process started. Some people like to try and time the market to get the lowest rate possible; while understandable that someone would want to get an even lower rate than what they’re hoping for it usually never works out. Markets move fast and that great rate you decided to move forward with might jump up the next day because you wanted to wait and see what if you could get it just a bit lower.
Send In Those Documents:
One of the best things you can do to ensure your loan process is efficient and smooth is send your documentation as soon as it’s requested. Try to target a turn around time of 24 hours but no more than 48 hours unless there is a serious roadblock that you can not over come. And when you send in that documentation make sure it’s exactly what the Loan Officer requested. As an example:
If your Loan Officer requests bank statements make sure you send in the entire bank statement, all pages – front and bak of each page. Don’t send in a screen shot of your balance or print out of your transaction history thinking that will do because it won’t. Not sending in exactly what was requested could delay your closing by four to seven days.
Get Ready For The Appraisal – If You Need One:
That’s right; some people don’t have to do an appraisal but most do. So if you have to do an appraisal make sure you are treating the appraisal inspection like you are selling the home. Appraisers are human and when they see a home that’s dirty and not well cared for they are more likely to turn in a report with a lower than expected value. On the flip side; when an appraiser sees a clean home that is clearly taken are of then the appraiser is more likely to come in on the higher side of what the value range might be.
Don’t Buy A Car When You’re Refinancing:
If you are about to refinance or you are in the process of refinancing then don’t let anyone check your credit during the process. Furthermore never, ever take on a new car loan or any other type of debt that might derail the process. Just wait until the process is over before you obtain new debt. In the rare instance that a homeowner can’t wait (lets say he or she totaled their car) then be prepared to provide some additional documentation.
You’ll have to document in writing what the terms are of the loan (or lease) and the new monthly payment will be factored in to your overall Debt-To-Income ratio. If you are thinking of taking on new debt during the refinance process make sure you talk to your Loan Officer first, before you apply for new credit.