4 Steps to Refinancing a Home Equity Loan
If you are looking to save some money, refinancing home equity loan rates may be to your advantage. If you picked up your home equity loan at a time when interest rates were high, you might be paying more than you need to every month. Here are the necessary steps that you need to take to refinance your home equity loan.
1. Shop Around
The first thing that you have to do is find a lender to work with. They might be willing to toss out some attractive incentives to get you in the door. Search the Internet and see if anything jumps out at you. If the deal sounds too good to be true, you might want to check out the company and make sure that they are legitimate. Get a few quotes from different lenders and use them as leverage to score the best deal.
2. Fill Out the Application
After you have decided on a company that you would like to work with, the next step is to fill out their home equity loan application. Most companies now have a website that allows you to do this online. You can get all of the necessary documents together at home and fill out the application at any time. This allows for greater flexibility with your schedule and a quicker process. The application will be pretty simple with the standard information. You can usually fill it out fairly quickly.
Once you have filled out all of the necessary documentation, the lending institution will want to verify everything. They will want to know how much money you make, how much your house is worth, and how good your credit score is. They will take care of pulling your credit report and researching it to their standards. They will probably want to see some recent pay stubs and a bank statement to verify that you have enough money to repay the debt on a monthly basis. In addition to that, they will most likely send an appraiser over to look at your house. They will determine whether or not your house is worth the amount of money that you are asking for above your primary mortgage balance. Many times, this will amount to a drive-by appraisal and a very general assessment of the value.
Once they have done all of the necessary paperwork and if you fit the criteria they will notify you that you have been approved. Depending on the company, they may set a closing date at a title agency or simply do the papework at your home. You will be presented the money you need and you can pay off the existing home equity loan.