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Refinancing Your Home for a Lower Mortgage: Your Questions Answered
There are plenty of reasons to refinance your home.Maybe you’d like to see if you can build more equity. Maybe you want some cash to pay off another debt. Maybe you’d like to switch from an adjustable-rate loan to a fixed-rate loan. Or maybe you simply want a lower monthly mortgage payment or lower interest rate. Regardless of your need, refinancing may help.
What are the first steps to refinancing my mortgage?
If you’re hoping to refinance for a lower mortgage, here’s how you do it. First, you’ll need to submit a new application, regardless of whom your current home loan is with. You may choose to apply online or call to schedule an appointment.
At Field & Main, our goal is to respond to our clients within 1 business day after we receive a completed application. If you’re a current client, we’ll take your application over the phone.
Things to Bring:
- If self-employed, bring income statements from the last two years
- If not self-employed, bring two most recent pay stubs and most recent W2 forms
- If you currently have your checking and/or savings at a bank that is not Field & Main, bring two months of those statements from your current bank
- Your property title insurance, or the deed to your property, if you have it
How can I switch to a fixed-rate loan from an adjustable-rate loan?
Can I do this through refinancing? If you only qualified for an adjustable-rate loan, you might not be able to switch to a fixed-rate loan at this time. However, this totally depends on the homeowner and the lender. For example, if you didn’t qualify for a fixed-rate loan, but then received a significant salary increase a year later, there’s a chance that you could switch loan types because of your improved financial situation.
How long does it take to refinance?
From the time of application to the time of close, the process typically takes no longer than four weeks. This always depends on communication and response time, but if the consumer brings in good documentation, the process will go more smoothly.
For example: Some people bring in only part of their tax return. Most banks, including Field & Main, need every single page. The lender will be reviewing all your finances and property title. Make sure there’s clarity within your documentation.
How long do I have to wait to refinance?
There isn’t a typical time period to wait for refinancing your home.
When rates are low, more people inquire about refinancing, but it just depends on each individual’s financial circumstance.
Many people refinance when their kids start college or when they’re trying to plan for retirement. Essentially, life events prompt refinancing more than a suggested time period does.
Does refinancing hurt credit score?
Any time credit is pulled, it may affect your credit score. It shouldn’t be a concern for those who have great credit. That said, there’s no negative connotation with refinancing. It doesn’t affect your score more than any other time it’s checked by a lender for any other reason.
Does my career matter? What if I change jobs?
Your job title won’t necessarily affect anything, but your income will definitely play a significant role in the refinancing process. You really just need to be able to support your current or proposed debt load.
As far as a career change relates to refinancing, there are usually two things that could happen. You could switch to a lower-paying position, and the lender will ask for an explanation, or you could be promoted to a higher paying position, and lenders won’t view this as a negative life event.
Can I cash out after refinancing?
At Field & Main, at least 50% of those who refinance wish to cash out. Whether it’s a wise choice is totally up to the individual’s financial situation. A cash-out refinance is a regularly used product by homeowners desiring a refinance for a purpose other than rate or term changes.
Cashing out through refinancing is a great way to:
- Get cash to start a savings account for the Holidays
- Get cash to remodel your home
It’s not wise to cash out if:
- You need fast cash to pay for unplanned expenses, i.e., a vacation
- You’ve refinanced fairly recently
Keep in mind: Refinancing doesn’t technically improve your financial situation if you don’t improve your spending habits.
Are there any other contacts I need to have besides the bank? Or does Field & Main take care of the whole process?
If you’re refinancing from a different bank, you’ll need to inform your home insurance agent of your decision to switch mortgage companies. Also, if your payments are set on auto-draft, you will need to change that to avoid any extra unforeseen expenses.
Is refinancing a suitable option for someone who is recently divorced or separated?
Refinancing your home after a divorce is not only suggested, it’s usually required. It’s standard for divorce papers to state that whoever will be staying in the house must refinance it.
In many cases, the household will drop from two incomes to one, which would definitely affect your mortgage payment. Because of this, you shouldn’t wait to get the process started. It would be wise to start the refinancing conversations early on in the divorce or separation stage so that you have an idea as to what you’d qualify for.
Why Field & Main?
The lender and loan processor will always be available.
With Field & Main, our customers have access to lenders before, during, and after the loan closes. We strive to respond to our clients in a timely manner (usually within 1 business day).
If you currently bank with Field & Main, we can even run the numbers over the phone if you’re in a rush.
Start the refinancing process today!