top of page
shutterstock_1253529022_edited.jpg

Rocky Top Lending

RE-FINANCE

Copy of Copy of Copy of Copy of HUNT (1618 × 1080 px) (6).png

RE-FINANCE

WHAT DOES IT MEAN TO REFINANCE A HOUSE?

Refinancing the mortgage on your house means you’re essentially trading in your current mortgage for a newer one – often with a new principal and a different interest rate. Your lender then uses the newer mortgage to pay off the old one, so you’re left with just one loan and one monthly payment.

 

There are a few reasons people refinance their homes. You can use a cash-out refinance to make use of your home’s equity or look into a rate and term refinance to get a better interest rate and/or lower monthly payment. A refinance could also be used to remove another person from the mortgage, which often happens in the case of divorce. You can also add someone to the mortgage.

 

HOW DOES REFINANCING A HOUSE WORK?

The refinancing process is often less complicated than the home buying process, although it includes many of the same steps. It can be hard to predict how long your refinance will take, but the typical timeline is 30 – 45 days.

 

Let's take a closer look at the refinance process.

​

APPLYING

The first step of this process is to review the types of refinance to find the option that works best for you.

 

When you apply to refinance, your lender asks for the same information you gave them or another lender when you bought the home. They’ll look at your income, assets, debt and credit score to determine whether you meet the requirements to refinance and can pay back the loan.

 

Some of the documents your lender might need include your:

  • Two most recent pay stubs

  • Two most recent W-2s

  • Two most recent bank statements

​

Your lender may also need your spouse’s documents if you’re married and in a community property state (regardless of whether your spouse is on the loan). You might be asked for more income documentation if you’re self-employed. It’s also a good idea to have your tax returns handy for the last couple of years.

 

You don’t have to refinance with your current lender. If you choose a different lender, that new lender pays off your current loan, ending your relationship with your old lender. Don’t be afraid to shop around and compare each lender’s current mortgage interest rates, availability and client satisfaction scores.

 

LOCKING IN YOUR INTEREST RATE

After you get approved, you may be given the option to either lock your interest rate – so it doesn’t change before the loan closes – or to float your rate.

 

LOCK YOUR REFINANCE RATE

Rate locks last anywhere from 15 to 60 days. The rate lock period depends on a few factors like your location, loan type and lender.

 

You may also get a better rate by opting to lock for a shorter period of time because the lender doesn’t have to hedge against the market for as long. Be warned, though: If your loan doesn’t close before the lock period ends, you may be required to extend the rate lock, which may cost money.

 

FLOAT YOUR RATE

You might also be given the option to float your rate, which means not locking it before proceeding with the loan. This feature may allow you to get a lower rate, but it also puts you at risk of getting a higher mortgage rate.

 

In some cases, you might be able to get the best of both worlds with a float-down option, but if you’re happy with rates at the time you’re applying, it’s generally a good idea to go ahead and lock your rate.

 

UNDERWRITING

Once you submit your refinance loan application, your lender begins the underwriting process. During underwriting, your mortgage lender verifies your financial information and makes sure that everything you’ve submitted is accurate.

 

Your lender will verify the details of the property, like when you bought your home. This step includes an appraisal to determine the home’s value. The refinance appraisal is a crucial part of the process because it determines what options are available to you.

 

If you’re refinancing to take cash out, for example, then the value of your home determines how much money you can get. If you’re trying to lower your mortgage payment, the value could impact whether you have enough home equity to get rid of private mortgage insurance (PMI) or be eligible for a certain loan option.

 

HOME APPRAISAL

Just like when you bought your home, you must get an appraisal before you refinance. Your lender orders the appraisal, the appraiser visits your property, and you receive an estimate of your home’s value.

 

To prepare for the appraisal, you’ll want to make sure your home looks its best. Tidy up and complete any minor repairs to leave a good impression. It’s also a good idea to put together a list of upgrades you’ve made to the home since you’ve owned it.

 

How you’ll proceed after the appraisal depends on whether:

  • The appraisal matches the loan amount. If the home’s value is equal to or higher than the loan amount you want to refinance, it means that the underwriting is complete. Your lender will contact you with details of your closing.

  • The appraisal comes back low. If you get a low appraisal, the loan-to-value ratio (LTV) on your refinance could be too high to meet your lender’s requirements. At this time, you can choose to decrease the amount of money you want to get through the refinance, or you can cancel your application. Alternatively, you can do what’s called a cash-in refinance and bring cash to the table in order to get the terms under your current deal.

 

CLOSING ON YOUR NEW LOAN

Once underwriting and the home appraisal are complete, it’s time to close your loan. A few days before closing, your lender will send you a document called a Closing Disclosure. That’s where you’ll see all the final numbers for your loan.

 

The closing for a refinance is faster than the closing for a home purchase. The closing is attended by the people on the loan and title and a representative from the lender or title company.

 

At closing, you’ll go over the details of the loan and sign your loan documents. This is when you’ll pay any closing costs that aren’t rolled into your loan. If your lender owes you money (for example, if you’re doing a cash-out refinance), you’ll receive the funds after closing.

 

Once you've closed on your loan, you have a few days before you're locked in. If something happens and you need to get out of your refinance, you can exercise your right of rescission to cancel any time before the 3-day grace period ends.

Rocky Top Lending

brad-huchteman-sR1Kz2auNJE-unsplash.jpg
CONTACT US

At Rocky Top Lending we've been helping customers afford the home of their dreams for many years and we love what we do. Reach out and let's get started today. 

LOGOS (4).png
IMG_0355.PNG

Company NMLS: #1998489/#2383127

John Renfro NMLS: #879586

Russ Cooper NMLS: #2316234

Michael Bell NMLS: #155728

COLORADO

Corporate Office
10940 S. Parker Rd., #223
Parker, CO 80134

NMLS: #1998489

TENNESSEE

Tennessee Branch
6923 Maynardville Pike, #282
Knoxville, TN  37918

NMLS: #2383127

GEORGIA

Georgia Branch

2972 Lookout Place

Atlanta, GA  37918

NMLS: #1998489

  • LinkedIn
  • Facebook
  • Instagram

©2022 By Rocky Top Lending. We hereby authorize you to view and print information on this website subject to it being used for informational and non-commercial purposes. The information contained in this website is believed to be reliable, but we do not warrant its completeness, timeliness or accuracy. The information on this website is not intended as an offer or solicitation for any mortgage product or any financial instrument. The information and materials contained in this website - and the terms and conditions of the access to and use of such information and materials - are subject to change without notice. Products and services described may differ among geographic locations, offices and as a result of individual conditions. Not all products and services are offered at all locations. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website. It is our intention that data provided on a subject is of a general nature. Our website does not represent an exhaustive treatment of subjects nor is the information intended to constitute accounting, tax, legal, consulting or other professional advice. Prior to making any decision or taking any action we kindly request you to contact your tax or legal advisors. Please use this document and information at your own risk. The content of this site is copyrighted and therefore any unauthorized use of any materials on this website may violate copyright, trademark, and other laws. Materials on this website may not be modified, reproduced, or publicly displayed, distributed or performed for any public or commercial purposes prior to our approval. © Copyright 2022 Rocky Top Lending. — All rights reserved.

ROCKY TOP LENDING

SeekPng.com_equal-housing-logo-white_2752060.png
LOGOS (2).png
bottom of page