Refinancing a Home

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A loan pre-approval simplifies the home buying and mortgage process by allowing your lender to review a lot of your documentation up front. As a pre-approved buyer, your offer on a home will be taken more seriously because it shows that you are qualified to borrow up to a certain amount of money. Click here to start the pre-approval process.

You will need to gather information about your income, assets, liabilities, and property details. Your lender may request specific information based on your personal situation and type of loan, but, in general, you should at least gather the items below:

• One month of pay stubs
• Two years of W-2s and tax returns
• Two months of bank statements on all accounts
• Sales contract and copies of the due diligence and/or deposit checks for the home you’re purchasing
• Contact information for your landlord, HR department, and any debts that you may be paying off
• Any applicable additional document, such as:

1. 1. 1. Divorce Decree/Separation Agreement
      2. Bankruptcy paperwork
      3. Letters of explanation on any derogatory debts
      4. Gift letter
      5. P&L statements for self-employed borrowers

A primary residence is a home you will live in the majority of the year. This type of home qualifies for the lowest minimum down payment and mortgage rates because lenders view it as lower risk. The amount of down payment varies based on the loan program, but it can be as little as 0%. For example, a primary home worth $350,000 obtaining a 30-year fixed mortgage with 5% down at a note rate of 7% and an APR of 7.138% would have a monthly Principal and Interest payment of $2,212.13.

A property is considered a second home when you live in the home only a portion of the year, it is located at least 50 miles away from your primary residence, and you do not plan on marketing the property for rent. Second homes have similar interest rates to primary residences, but require a larger minimum down payment of at least 10%. For example, a second home worth $350,000 obtaining a 30-year fixed mortgage with 25% down at a note rate of 7.625% and an APR of 7.768% would have a monthly Principal and Interest payment of $1,858.86.

An investment property is a property you purchase with the intention of earning rental income. This property type has the highest interest rates and down payment requirements. With this type of home, a down payment of at least 15% is required. For example, an investment property worth $350,000 obtaining a 30-year fixed mortgage with 25% down at a note rate of 7.625% and an APR of 7.768% would have a monthly Principal and Interest payment of $1,858.86.

Examples are based on rates effective December 28, 2023.

Fees vary according to the details of your loan. The average borrower will pay between 2% and 5% of the loan amount in various closing costs and prepaid expenses when they close on a mortgage. If applicable, the fees you will pay are outlined in your Loan Estimate that your lender is required to provide within 3 days of your application. Be sure to review the loan estimate carefully and ask questions if there is something you do not understand. Examples of typical closing costs and prepaid expenses include:

1. • Loan origination fee
   • Discount points
   • Credit report
   • Flood certification
   • Application/Commitment fee
   • Appraisal
   • Prepaid interest
   • Homeowners insurance premium
   • Mortgage insurance premium
   • FHA, VA, and USDA premiums
   • Attorney’s fees
   • Title search fee
   • Lender’s title insurance
   • Owner’s title insurance
   • Recording fees
   • Home inspection
   • Pest inspection
   • Property survey
   • Property taxes