Refinancing your home can be a good idea for various reasons, depending on your home, market conditions, and your financial situation. It’s often a practical way to tap into your home’s equity, get a better interest rate, and decrease your monthly payments. Similar to when you initially purchased your home, refinancing is an intricate process that involves paying off your current mortgage loan and securing another one. If you’re thinking about refinancing, you’ll benefit from working with a local expert mortgage broker in West Chester who knows the area and the market best.
At Penn Street Mortgage, we can walk you through each step to ensure refinancing is the best fit for you. With multiple options and changing market conditions, it’s best to seek professional advice in your local market versus online or national mortgage brokers. But where to get started? And what can you expect during the refinancing process?
Understand why you want to refinance
Refinancing can have a lot of benefits depending on your current loan terms and conditions, and what you’re looking to accomplish. Depending on your goals, though, there are a variety of home loan options you might be interested in. Are you looking to decrease your monthly payments? Do you want to decrease from a 30-year loan to a 15-year loan? How much home equity do you have? These questions will help your mortgage broker understand the best loan solution for your refinancing.
Find the best rate and product
There are multiple types of refinancing, depending on what you’re looking to accomplish.
- Cash-out refinancing – This type of loan allows you to cash out on your home’s equity and then get a new loan for the home’s current value. A cash-out refinancing loan can sometimes result in a higher monthly payment and higher interest rate, but you’ll receive a lump sum of cash at closing.
- Rate-and-term refinancing – If you’re hoping to change your mortgage loan’s interest rate or length, you’ll likely get a rate-and-term refinancing loan. A rate-and-term refinancing doesn’t provide any cash at closing but can decrease your monthly payments and shorten the length of your loan.
- Adding or removing someone from the mortgage – You’ll also have to go through a refinancing application if you have to add or remove someone from the mortgage. The person you’re adding will also have to go through the approval and application process.
There are a lot of advantages to using a local mortgage broker, but one of the key benefits is their ability to shop around for the best rate. Since they’re not tied to a national bank, your independent local mortgage broker is able to offer different loan programs to make sure they are securing you the best rate and terms for your loan.
Once your mortgage broker has presented you with the options, you’ll be able to have a clear picture of how much your monthly payments will be, if you’ll receive any cash from the refinancing, and how much your closing costs might be.
Submit your application
Refinancing a home involves a very similar process to when you initially purchased the home. If you’ve reviewed your options and picked the mortgage product best suited for you, you’ll have to submit an application. This involves a significant amount of paperwork and personal information related to your finances, including an in-depth look at your income, bank statements, investments, and debt.
By working with Penn Street Mortgage, a top-tier local mortgage broker in West Chester, you’ll have a dedicated person during the process to personally walk you through each step of the way. Our team prides itself on being over-communicated and organized, ensuring your application is processed in a timely and accurate manner.
Secure your interest rate
Just like the market, interest rates fluctuate every day as well, with different rates changing how your monthly payment is calculated. In order to avoid this, it’s key to lock in your interest rate for a certain period of time until your application has been approved and you’re ready to move forward with closing. By working closely with your local mortgage broker, you’ll be able to get the best rate and stay up-to-date on how the market is changing. If a lower rate becomes available, you can speak with your mortgage broker on how best to proceed and get the lowest rate possible.
When you lock in an interest rate, the clock will start ticking before the hold expires. If there are delays with your loan application, you could lose the rate lock.
Underwriting and appraisal
After your application has been submitted and you’ve locked in your interest rate, your loan will move to the underwriting process. A lender will verify your financial information and get details of the property you’re refinancing.
In the underwriting stage, you will usually have to get a home refinancing appraisal, where a third party will determine the property’s value. This is a crucial process that can determine how much cash you’ll receive in a cash-out refinancing or the amount of equity you have in the home.
Time is of the essence during the underwriting process, so ensure you’re responding quickly to your lender’s request for paperwork or supporting information so the loan stays on schedule.
Ready to close
Once the underwriting and appraisal are complete, you’ll get the approval that you can close on your new loan. Similar to closing on a new home, you’ll receive a closing disclosure outlining your closing costs, the terms of your loan, if you’ll receive any cash from the refinancing, and your new monthly payment.
Local mortgage brokers are your ace in the hole throughout the refinancing process, giving you the market insight and communication necessary to make the process seamless and efficient. If you’re looking for a mortgage broker in West Chester, look no further than the team of experts at Penn Street Mortgage. Trusted across the region, we’re here to help you through the process of refinancing with your interest in mind. Contact us today to get started and understand your options.