The procedure for a refinance mortgage can vary slightly from lender to lender as well as transaction to transaction. There can be differences in either the process or the type of loan that may be variables impacting the mortgage refinance process. That being said, a basic process would work as follows:
- Initial Loan Application
You would contact your bank, lender, or mortgage broker and make an initial loan application. This would involve giving them all the appropriate lending information including paystubs, W2’s, tax returns, asset statements, etc. From here the lender can run the application and give you a quote on interest rate, closing costs, and program options available to you. From there you and your loan officer can decide which option works best and the file would be moved into processing.
- Processing Your Loan
At this stage the lender will have ordered title search on the home, ordered an appraisal, and begun processing your loan. They will typically verify the documents that you provided, as well as thoroughly review your credit report and verify your employment. Once the appraisal and title come back they are placed in the file and it is moved to underwriting.
- Underwriting
This is the stage in the process where your final loan decision is made. Up to this point most of what was done was information gathering. At this stage an underwriter reviews all of the information that was gathered. They will balance this information with the terms of the approval of the loan and make sure that everything checks out. Assuming it does, a loan commitment will be issued. This is the formal approval of your loan, it will tell you if any additional information is required, or if the loan is cleared for closing. If additional information is required, your loan officer or their processor will contact you and let you know what information is needed. If not the file is moved to closing.
- Closing
At this point the loan is approved and all that is left is for the final papers to be signed. An escrow agent will normally handle this document signing, reviewing all the terms and pertinent documents of your new loan. Once you sign the documents, there is typically a 3 day period of recission. This is a period where you can cancel the loan transaction if you like, otherwise, at the end of this period the loan funds. Funding the loan is where the funds from the new lender are disbursed and the old mortgage would be paid off. This is normally handled by the land title agency who released the old mortgage from title and records the new one. At this point the process is complete and the only thing left for you to do is to begin making your new loan payment when it comes due!
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