The vast majority of property owners sought financial assistance to acquire their property. This assistance came in the form of a mortgage. While there are some few people who can afford to pay cash for a home or commercial property, most people rely on mortgages offered by banks and mortgage companies among other types of home financiers. When applying for a mortgage, both the lender and borrower appreciate the fact that the borrower’s financial situation may change, so there is usually a provision for mortgage refinancing. Borrowers are normally allowed to refinance mortgage in any of the following cases:
– When they want to cash in on the accumulated equity in the property
– When they want to extend the term of the loan to reduce monthly payments
– When the prevailing interest rates are significantly lower than the rate paid by the borrower on their mortgage facility
– When the borrower wants to offset an ARM to procure an FRM
Property owners should know that mortgage refinancing is a costly process, so the benefits of refinancing must be weighed against the associated costs to determine whether or not the decision to refinance mortgage is sound. The following are steps every borrower must take to refinance their mortgage:
Step #1: Get Professional Advise
It’s difficult for the average person to pick the best time to refinance. Financial experts, however, spend all their time analyzing trends in the market. They can tell you to refinance immediately or wait a couple of months. If your credit score is low, the financial adviser may advise you to wait until your credit score is high enough to be eligible for low-interest mortgage refinancing.
Step #2: Find the Right Lender
Homeowners should never assume their current lender is the only financier willing to refinance their mortgage. There are many financial institutions out there which are always eager to get new business. Therefore, you should do some shopping around to learn about what other lenders are offering. If your bank is not willing to offer you a better deal than what other lenders are offering, you may want to consider refinancing your mortgage elsewhere. If you do not have the time, know-how or confidence to identify the right lender, you can work with a mortgage broker or a private mortgage adviser.
Step #3: Submit Your Application
It is important you remember that refinancing a mortgage entails procuring a new mortgage, so you will go through the same process you went through the first time. The lender will run a credit check on you and demand a list of assets as well as more information about your income and personal finances. Details of the property in question must also be included in the application. This may also include an appraisal report by an approved valuer. The value of the property must be higher than the loan amount you’re applying for.
Step #4: Sign the Necessary Paperwork
If the application is approved, the lender will draft a mortgage refinance agreement and ask you to review it before signing it. Be sure to go through the contract with your lawyer or financial adviser before signing it to make sure everything is in order.