This program is designed to allow sorority member, family, friends and the communities we serve to be trained on three phases of Home Ownership. Information is available on any one or all three phases

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Refinancing means getting a new mortgage and using some or all of the proceeds to pay off the old mortgage. Homeowners may refinance for several reasons:

  • To take advantage of lower interest rates and lower your monthly payment If interest rates have gone down since you obtained your original mortgage, you could save money over the life of your loan, while reducing your monthly mortgage payment.

  • To switch mortgage types You may want to switch from a variable to a fixed interest rate, or vice versa. If you have a balloon/reset mortgage , you must either pay the mortgage in full at the end of the 5- or 7- year term, start procedures to reset your mortgage to a fixed-rate mortgage, or refinance with a new mortgage.

  • To shorten mortgage terms You may want to refinance to shorten the term of your loan. This would allow you to pay less interest over the life of the loan because the money is borrowed for a shorter period of time, and builds up equity in your home more quickly.

  • To get "cash out" Some lenders will let you borrow more money than the balance of your original mortgage, based on the equity you have in your home. A portion of the money left after the original mortgage is paid off goes to you to use for things like paying for a child's education or home remodeling . However, remember that you'll have a new mortgage, at a higher amount, which will eventually need to be paid off.

The Refinancing Process

Refinancing is very similar to getting the first mortgage on your current home. You should follow the same steps as when you obtained your original mortgage.

  • Research mortgage products Look at the different types of mortgages and compare each to find which works best for you.

  • Work with a lender Find a lender and know what lenders look at when evaluating mortgage applicants .

  • Apply for a mortgage Know the steps in the application process .

Applying For a Mortgage

When you've decided on a lender and have an understanding of the type of mortgage that best meets your needs, you will receive from your lender a mortgage application. The "Uniform Residential Loan Application" requires personal information such as your income, assets, liabilities, and a description of the property. You may need to pay an application fee that covers the lender's processing costs. Be sure to ask if the application fee is refundable. You can submit your application in person, by mail or fax, or online .

What are the next steps?

  1. • Know what documents and information you will need.

  2. • Understand the steps in the application process .

  3. • Know what happens after you apply for a mortgage.

Steps in the Process

When you apply for a mortgage, several things happen:

  • Your lender will get an appraisal. The appraisal will determine the market value of the property since it will be used as collateral for your loan. You'll be charged a fee for this service; it may be included in your closing costs . By law, you have a right to obtain a copy of the appraisal report.

  • Your lender will look at your credit report. Your lender will look at your credit report to verify your credit history. You'll be charged a fee for this document as well. If you're pre-approved, this step may already be completed.

  • Your lender will verify your personal information. Your bank account and employment information will be verified. Your lender will usually ask you for your two most recent monthly bank statements, most recent paychecks or W-2s. If you can't provide the W-2s or bank statements, a Verification of Employment (VOE) and Verification of Deposit (VOD) will be mailed on your behalf to verify the last two years of employment and banking information.

Your Documents

Your lender is required by law to provide you with the following documents:

  • Truth-in-lending disclosure. This disclosure includes a summary of the total cost of credit, such as the Annual Percentage Rate (APR) and other specifics of the loan. The APR includes the interest rate, points, broker fee, and any other charge you're required to pay.

  • "A Home Buyer's Guide to Settlement Costs." This guide is a government publication that describes the closing or "settlement" process, associated costs, and your rights.

  • Adjustable-Rate Mortgage (ARM) disclosure. This disclosure includes information about terms and costs associated with an ARM, past performance of the index to which the interest rate will be tied, and the "Consumer Handbook on Adjustable-Rate Mortgages."

  • Annual Percentage Rate (APR) information. This is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fee, and any other charge you're required to pay.

  • Good Faith Estimate. This disclosure lists estimated costs you will likely incur in connection with the closing of your mortgage.

After You Apply

After you apply for a mortgage, you will work with your lender to determine a settlement date. You may also want to lock-in an interest rate at this time.

The Qualification Process

The next step is the qualification process. Your lender will review your application and decide whether or not to approve it. Be sure to answer any questions quickly and honestly. Follow up with your lender to get the status of your application.

If you're turned down for a mortgage, ask why. By law, you should receive a written disclosure statement from the lender indicating the principal reason(s) your loan was turned down. Common reasons include too much debt or credit that needs improvement .

If you get turned down, talk with your lender and develop a plan. You may try to qualify for a smaller mortgage or reapply after you've paid off some of your debt.
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