Monday, November 10, 2014 - Article by: Prospect Financial Group, Inc. -
A refinance is by definition to "finance (something) again, typically with a new loan at a lower rate of interest." But this doesn't really capture what goes on with a refinance. How does it work?
Well the first step in a refinance is to find a lender that you want to refinance with. Shop around to make sure that you get the best deal possible. Once you've picked the company you want to go with, it's time to send in all required documentation. It's much better to send everything in at once than to send things sporadically. Save time and money by being proactive and organized.
Now that the lender has been decided upon, it's time to pick your title and escrow companies. These companies deal with all of the lawyering that goes into a refinance. The title company will pull a title report to pull all leans on the title. The escrow company is involved in all real estate transactions. They act as a nonbiased third party that separates the borrower from the lender.
After choosing a lender, title and escrow companies, underwriting can take place. This will include evaluating debt-to-income, pulling your credit, and the like. This is where mortgage processors come in. You will mostly be in contact with your lender's processors during the process of underwriting.
Underwriting will show whether you are eligible or not. So once you've been approved, you'll be set for loan approval. This happens when everything checks out and your loan is officially accepted by your lender. This will include an appraisal and all documentation being double checked. All conditions and qualifications are met.
After this whole process, it's time to close your loan. You will meet with a notary in person to sign all official documents. Once all documents are signed, your loan has officially closed.
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