Overview Of The Refinance Process

Below is an overview of a typical refinance mortgage loan process.  Depending on the type of loan you are applying for: Conventional, Jumbo, FHA, VA, & also the state and property type you are purchasing (ie. Condos have some additional requirements) this process may vary.  It’s meant to give you an overview of what to expect and what transaction milestones you’ll need to complete during the loan approval process.  

We also have a created a Tips to a Successful Refinance Transaction Page with additional dos & don’t’s during the processing of your loan.  

1. Set an Appointment with one of our Professional Mortgage Bankers to Review all Aspects of your Scenario
   
   

   • There are several important considerations when deciding whether it makes sense to refinance your existing mortgage.  

   • Some of the items we recommend covering in your analysis with our Bankers include:

     1. For a more information regarding the various types of refinance transactions please visit our web-page Should I Refinance?

     2. What are your basic goals to achieve in Refinancing?

        1. Lower your interest rate

        2. Remove mortgage insurance

        3. Shorten your term (# of years to repay the mortgage)

        4. Debt Consolidation (pay off debt)

        5. Take Cash-Out

     3. Determine how long you plan on holding the loan.

        1. Do you plan on selling the property?

        2. Or, might you pay-off the mortgage?

        3. The length of time that you will be holding the mortgage will play a large part in determining whether it will make sense to incur the costs of a refi if you are attempting to lower your interest rate and monthly payment.

     4. Does it make sense to take a higher interest rate and receive a credit to your closing costs?

     5. Evaluate your monthly savings by lowering your rate vs. the cost of the refinance?  

     6. How long will it take to recoup costs of the refinance?

     7. What are the costs/benefits/risks of refinancing into a shorter loan term, or into an adjustable rate mortgage?
        
        

2. Pre-Approve Your Loan & Review the Refinance Transaction Costs and New Estimated Monthly Payment Details with the Help and Support of one of our Mortgage Bankers
   
   

3. Sign Loan Disclosures & Initiate the Loan Process
   

   • After you reviewed the various options and decide to move forward with the transaction, the next step is to sign loan application disclosures.

   • Foundation Mortgage provides these disclosures to you electronically.  

   • E-Sign is a quicker, more efficient and accurate manner to sign your loan application.

   • Once we receive your E-Signed disclosures back we will begin ordering out on your file:

     1. Appraisal

     2. Title

     3. Insurance (If provided)

     4. Verifications of Employment

     5. Tax Transcripts

     6. Etc.
        
        

4. Submission of the Application Package to the Loan Processor

After you have signed your application, your Mortgage Banker will work with you to gather all your credit approval documents such as tax returns, pay stubs, bank statements, etc. to submit the loan to the Loan Processor. It is important that you gather the required documents quickly and completely at this stage of the process. Disorganization or delays at this step can lengthen out the loan process. The cleaner and more complete the file, the better.

• The Loan Processor will then review your documentation and ready the loan package for review by the Underwriter.

• The Loan Processor will coordinate with the appraisal order, title & insurance & verification requests and package the loan to the Underwriter.  

• The QC Department will also run initial Quality Control, Fraud, & Undisclosed Debt checks and coordinates any findings – requests for more information with the Loan Processor.  

• The Loan Processor may ask you questions & request additional information (called “conditions”) in order to make a more complete package for the Underwriter to review.
  
  

5. Processing Conditions Gathered and Returned to the Loan Processor

After reviewing the file, your Processor/Mortgage Banker will send any outstanding items to you that need to be gathered in order for your file to be submitted to Underwriting.

PLEASE NOTE:  Underwriters will not review incomplete loan files.  Take time to carefully review your “Processing Conditions” with your Mortgage Banker.

1. Delays in the process can occur at this step if all requested items are not provided promptly.

2. The idea is to get through these early stages of the mortgage process as quickly as possible so that your loan is approved prior to your Mortgage Commitment Date (mentioned in step 2 above).
   
   

Best Practices:  Make sure to pay attention to the details on your condition list- Ie:

3. If an updated bank statement is requested, make sure that all pages of the statement are included (i.e. If the statement reads Pg. 1 of 6, double check that all 6 pages of the statement are supplied).

4. If a clear ID document is requested, make sure that the scanned/copied image is visible.

5. Also ensure that the docs copied/scanned fit within the margins and are not cut off.

6. If these documents are gathered haphazardly or without attention to detail, delays will occur.
   
   

6. Submission to Underwriting
   

   • The Loan Processor will next submit the loan to the Underwriter.

   • The length of time it will take for underwriting to review your loan will depend on the type of loan, but is typically between 24 – 72 hours.  

   • Your Mortgage Banker will consult with you on current turn-times when you are getting ready to submit your loan to underwriting.

   • Foundation Mortgage is a boutique direct lender and offers “In-House” Underwriting to better control turn-times and streamlines the process.
     

7. Conditional Approval/Underwriting Conditions

   • Once the Underwriter has reviewed and approved your loan, the Loan Processor and your Mortgage Banker will send you a list of any additional items that need to be satisfied prior to closing your loan.   These are called “Underwriting Conditions”.

   • You will gather these items similarly to how you gathered items after the Processor reviewed the loan file.

   • Appraisal Follow-Up & Appraisal Acknowledgement Disclosure To Be Signed.

     1. Your processor will send you a copy of the Appraisal for your records and an acknowledgement disclosure for you to complete which confirms that you have received the appraisal.

     2. At this time- you should speak with your Mortgage Banker  and ask whether it is ok to have the Title Company order the survey (If it is a single family home- not required for condo transactions).
        
        

8. Review of Underwriting Conditions

   • Once you have gathered all of the Items requested by the Underwriter, your Processor will review them in order to confirm that they match what the Underwriter has requested & determine whether we should provide any additional information to support or facilitate approval of your loan.
     
     

9. Updated Worksheet Estimating Closing Costs & Cash-To-Close

   • You will be provided an updated transaction worksheet detailing closing costs and cash-to-close at this point & prior to resubmitting the loan to underwriting for final approval.

   • Typically, we will have received back final fees from various third parties involved in the transaction:  

     1. Title Company Fees

     2. Insurance Premiums (Wind/Hazard/Flood/Contents)

     3. Survey

     4. Etc.

   • Check the Updated Closing Cost & Cash-To-Close worksheet carefully for

     1. Interest Rate

     2. Loan Amount

     3. Loan Program:  Fixed, Arm, etc.

     4. Loan Term: 30 year fixed, 15 year, etc.

     5. Tax and Insurance Escrows:  

        1. Are they being waived?

        2. Or are taxes and insurance being paid as part of your monthly payment with the lender to disburse when due (annually).

   • Lender Credits

     1. Are any lender credits included on the closing statement provided to you?  Confirm the amount if there are.

   • Total Estimated Monthly Payment  & Cash-To-Close

     1. Review the total estimated monthly payment and cash-to-close.
        
        

10. Clear-To-Close
    

    • Once your Loan has been given final approval from the Underwriter, it will be forwarded to our Closing Department.

    • Our Closer will review the Updated Closing Statement that you approved in the previous step and will coordinate with the Title Company and Investor in Preparation of the Final Closing Statement.

    • A draft will be forwarded to you for approval at least 3 days prior to closing.   It’s important to note that under the new TRID compliance regulations, you must receive your Closing Disclosure at least 3 days (if signed electronically) or 7 days (if delivered by mail) prior to closing.  
      
      

11. Closing Best Practices
    

    • The title company will require a government issued picture ID for each person signing at closing.

    • Any person on title will need to sign documents at closing.  Please ensure that all parties on title will be present at the closing.

    • Non-borrowing spouses will be required to sign the mortgage on any primary home and most second home transactions.   

      1. Please coordinate logistics so that they are present as well.

    • Transfer of Funds - Cash Due or To Be Received at closing.

      1. If you are bringing any money to closing, please coordinate with your contact at the title company to arrange the transfer of the funds at closing.

         1. Title Companies will not accept personal checks at closing.

         2. Most Title Companies no longer accept cashier’s checks due to Fraud.

         3. Please arrange the payment method with your Title Company so you don’t encounter any problems at closing.

         4. It is a good idea to contact your bank a few days prior to closing to confirm the time-frame they may need to approve a wire transfer if the amount is unusual for your normal account activity.

      2. If you are receiving any cash back from your closing, ask the title company to confirm with you the manner by which the funds will be sent to you. We suggest wire transfers for larger amounts and for your own security. Also to prevent wire fraud, ask the title company to reconfirm your account information on the day they are transferring funds.