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Refinancing Your Home

Learn about the refinancing process

In many cases, the refinance process is simpler than a home purchase. The steps in the process are:

1.Good Faith Estimates (GFE)

If you choose to get a good faith estimate (GFE) from multiple lenders, request them on the same day so you can accurately compare interest rates and closing costs.

Shop wisely. Some lenders will give you lower interest rates and charge higher closing costs, and some lenders offer lower closing costs but will charge a higher interest rate. A good loan officer can help you determine which is best for you.

In addition to the Good Faith Estimate we provide, Affinity Lending will prepare a detailed Affinity Savings Calculation that shows you how much money you will save through the Hometown Home Loan Program. We will also help you compare GFEs from other lenders to make sure you’re getting the best deal.

2.Applying for a refinance

When you have selected a lender, have copies of all your financial documents handy:

  • Pay stubs
  • Account statements
  • W2s
  • Current mortgage information
  • Home insurance provider

Ask questions about your lender's application process and timeline.

3.Lock in your interest rate

When you decide to lock in your interest rate, your lender will provide you with another Good Faith Estimate. Make sure it is not drastically different from the first one you received.

Rates change daily, and in volatile markets, can change multiple times each day. When rates change, it is mostly what each interest rate costs, sometimes called points.

4.Signing your final documents

When your loan has been processed and is ready to close, you will need to schedule an appointment to sign your closing documents.

After you have signed your closing documents, you still have the right to cancel the refinance, if you notify your lender within three business days (except on investment properties).

Pick ups some tips to help with your refinance

There are many good reasons to refinance your home, but before making the decision to refinance, please review these tips and speak to your Hometown Home Loan Program loan officer. For borrowers who are refinancing to pay off debt, the following tips will help you avoid creating new financial risks.

Refinance Tips:

  • Make sure the savings outweigh the costs, based on how long you plan to keep the property.
  • It is not necessary that interest rates be 1% to 2% lower than your existing rate.
  • Research your options.
  • Be careful of advertised schemes to save homes from foreclosure.*
  • Do not let debt collectors pressure you into refinancing.
  • Do not refinance low-interest debts with higher-interest loans.

* Remember that mortgages are a matter of public record. You may receive solicitations from many lenders advising you to refinance because they have access to your public title information.

Mortgage default and foreclosure prevention

In today's economy, a person's financial situation can change in an instant. The loss of a job, unexpected medical or other recurring expenses, or unclear loan repayment terms can leave even the best-laid budget in disarray and create a mountain of debt that can get out of control quickly.

When this happens, it can be hard for a person to seek the help they need because of social stigmas, denial that the situation has become serious or even old-fashioned procrastination. Homeowners in this situation have a lot at stake as they face the possibility of losing their good credit standing (which can affect their ability to refinance) or the worst-case scenario of foreclosure.

Several community resources offer counseling and financial education that can help prevent you from defaulting on your loan or facing foreclosure. All housing advocates advise homeowners to contact your loan servicer at the first sign of distress. Most banks and loan servicers have departments in place to work with borrowers to repay or modify their loan and usually have a wide variety of programs available. Foreclosure is a long and costly process for both the bank and the affected homeowner, and it's in everyone's best interest to prevent mortgage default by starting the communication early to find a solution that works for both parties.

To learn more about default and foreclosure prevention programs in your area, click here.

What to do if you fall behind on your mortgage

When financial situations change, there are actions you can take to if you find yourself falling behind on your mortgage. Here are a few steps you can take to help get yourself back on your feet.

1.Your mortgage or rent payment should be your top priority in paying your bills each month. Use unemployment compensation benefits, workers’ compensation benefits, spouse's income, savings, and help from friends and family to pay your housing expenses first.

2.Contact your mortgage servicer if you fall behind.

  • Keep all correspondence from your mortgage in one place and request current copies of paystubs, bank statements and tax returns from the previous two years.
  • Write a hardship letter and collect all documentation of hardship.
  • Compile a family budget and have the figures on hand when you talk to people.

3.Seek advice on repayment alternatives.

  • Many communities offer foreclosure prevention/mortgage default counseling.
  • Learn more about refinancing, temporary forbearance, loan modifications, extending your loan, short-term assistance loans and possibly selling your home.

4.Cooperate with your mortgage servicer.

  • Be open, honest and realistic. Your attitude about meeting your obligation can influence your loan servicer's decision to help you. Understand that it will take a combined effort to help solve your problem.
  • If you do not understand what your servicer is telling you, ask them to explain it in a way you will understand, or seek assistance from a nonprofit organization.

5.BE WARY OF FORECLOSURE SCAMS! Avoid paying any upfront fees to any organization claiming to negotiate your mortgage or debt. Debt management groups do not provide you with any services you cannot do for yourself, for free. Working with a nonprofit organization — preferably one with a 501(c)(3) status, can provide you with an impartial and knowledgeable advocate during a highly distressful time.