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Refinancing Checklist
Whether you want to improve the terms of your current mortgage or
leverage your home equity for an important purchase, refinancing lets you
take advantage of your most valuable asset -- your home.
Use this checklist to help you think through your options and to track
your refinancing progress.
FIRST, DETERMINE YOUR GOAL AND FOLLOW THESE
STEPS:
Should you lengthen the term of your loan, thereby lowering your monthly
payments?
Can you shorten the term of your loan, thereby building your equity
faster?
If you want to change or improve the terms of your current mortgage, or
home equity loan or line of credit:
- Decide if refinancing is
advantageous
- Is the current interest rate
for refinancing lower than your existing rate?
- Can you afford the closing
costs and transaction fees?
- Does your current lender
offer special deals for refinancing?
- What effect will the
refinance have on your payments and your current home equity?
- Compare your best refinance
option with your current mortgage.
- Determine your payoff amount,
including any prepayment penalty. (Consult with your lender.)
If you want to get a larger loan or have an ongoing source of funding
in order to remodel, make major purchases, pay off other loans and
consolidate debt, or meet any other financial needs:
- Determine the amount of
money you need. Is this an unknown amount, likely to fluctuate over
a long period of time? If so, a home equity line of credit might be your
best financing option. You can take money out as you need it and pay
interest only on what you borrow.
- Assess current interest
rates. Are interest rates generally better than your existing rate?
- If yes, cash-out refinancing
(replacing your existing mortgage with a larger amount) might be your
best option.
- If no, getting a home equity
account is a smart way to leverage your home asset. It allows you to
keep your current mortgage intact.
- Determine the details of the
products you're considering. Be sure to consider closing and
transaction costs, as well as your new monthly payment. Ask your lender
for help.
NEXT, GET READY TO APPLY:
- Assemble the required
financial information, such as:
- Year property was acquired
- Original cost of the home
- Payoff balances for your
first and any second mortgages, if applicable
- Income tax forms
- Income information
- Information regarding other
debts
- Bank statements
- Apply.
- Work with your lender to set
up an appraisal and get title insurance.
- Pay any closing costs,
transaction fees, or taxes required, if not already included in the
loan. (Your lender will help with this.)
To learn more about refinancing through the NEA
Home Financing Program®, go to neamb.com/loans/hmfpge.jsp.
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