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The Sandy Spring Way

6 Tips to Simplify Refinancing

June 10th, 2015 | By Sandy Spring Bank

June is National Homeownership MonthJune is National Homeownership Month, so we created a special Homeowner How-To blog series. Throughout the month we’ll provide tips to help homeownership be as simple and productive as possible. This week, we’re highlighting six tips to help you simplify the refinancing process.

  1. Shop around for the best rate. There is a general misconception that it is easier to work with your current lender, but your current lender will usually require you to submit the same documentation as other companies. This is because most loans have to be approved independently. Even if you have made all of your mortgage payments on time, your existing lender must still verify assets, liabilities, employment, etc. all over again – so there’s no harm in shopping around to see where you can get the best rate.
  2. Do a break-even analysis. Determine the total cost of the transaction and then calculate how much you will save every month. Divide the total cost by the monthly savings to find the number of months you will have to stay in the home to break-even. For example, if you’re planning to keep your loan type the same, your break-even analysis may look like this: the transaction costs $2,000 and you save $50/month, you break even in 2,000/50 = 40 months. In this case, it would make sense to refinance only if you plan to stay in your home for 40 months or longer.
  3. Get a Good Faith Estimate (GFE) of closing costs. Within three business days after the mortgage banker or lender receives your loan application, you are required to receive a written statement detailing all transaction fees. This serves as the best way for you to know what you’ll pay for your loan.
  4. Read your loan documents. This may seem simple, but it is very important to review documents carefully in advance, as it is unlikely you will have time to read everything during the closing appointment.
  5. Provide documents to your mortgage company as soon as you can. If your mortgage company asks for additional documentation, provide this immediately. Delays in providing these documents could impact the rate available to you.
  6. Get your rate lock in writing. When a mortgage company says they have locked-in your rate, make sure to get a written statement including the interest rate, the length of rate lock, and program details.

Refinancing your home is not always easy, but with these tips, the process may be a little smoother. We are also available to assist you on this journey. Visit our website to learn more about how we can help.

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