Refinancing: The Mortgage Process Simplified

When you refinance, you'll go through almost the same process as when you first purchased your home, with the main difference being that you don't have the get-preapproved-and-find-a-house-to-purchase element.

Here's a simplified step-by-step process of what to expect when you're going through a refinance transaction.

1) You give your loan officer the following documentation: most recent paystubs, tax returns for the last two years, the last three months' bank statements, most current 401k, stocks and bonds statements (if any), a copy of your most current mortgage statement and a copy of your homeowners insurance policy.

2) Your loan officer will need to pull your credit report to find out what your credit score is.

3) Your loan officer, after doing a value check to make sure that your loan-to-value ratio is where it should be, will arrange to have an appraiser call you to set up a time to swing by your place and do an appraisal. You'll typically need to pay the appraiser on that same day.

4) Your loan officer will start putting your file together so it can be submitted to the lender for underwriting. Your file will include the income and asset documentation that you submitted, as well as the appraisal report, escrow instructions and a preliminary title report.

5) The lender will review your file, and if the underwriter doesn’t have any additional conditions (such as updated bank statements, etc.) that need to be submitted, your loan documents will be emailed to the escrow company. The escrow company will call you in to sign your loan documents or have a notary go to your house to have you sign loan docs. This is also the time that your escrow officer will let you know how much money you need to bring in for the rest of closing costs, if you asked that the amount not be rolled into your new loan amount.

Note: While not very many loan advisors attend their clients signing but I really prefer to be there, so that I can check and double-check and explain every document before my client signs anything.

6) Your signed loan documents are taken back to the escrow company. The escrow officer adds some more documents to the file and messengers it back to the lender.

7) The lender’s underwriter reviews your documents to make sure all the i’s are dotted and the t’s crossed. He or she will then tell the lender to release the money to the title company. The title company will then wire the money to escrow. Escrow disburses the funds accordingly.

8) Escrow sends out the forms to the courthouse of the county in which the property is located for recording.

9) Shortly before or after the recording, the escrow officer will call you and confirm that the deal's done. If you're doing a cashout refinance, you'll either pick up a check or have the escrow company wire it into your bank account.

10) Hooray! You're done!