Stages of the long way and the probable obstacles

Before starting the refinancing it is necessary to know, which processes are coming. They are about the same as during the initial loan.

To address the bank a standard set of documents is required: an application for a loan, a copy of the passport of the borrower and co-borrower, an income statement, loan agreement, a certificate from the existing lender on the balance of the debt repayment history, certificate of state registration of property rights to housing.

The bank, refinancing the loan, assesses the customer’s solvency. The procedure is standard, as in conventional lending. One should remember that the loan history may reveal facts that will be the ground for refusal or a sharp increase in rates, namely: the delay during the term of service credit, delay of payments on insurance premiums and other charges. According to employees of banks, cases of single delay for a day or two can be “forgiven.”

Reduction of the borrower’s income or loss of work, or inconsistency of collateral requirements established by the bank play a negative role. In particular, reduction of the cost of the apartment.

The bankers do not like if there are minors in the mortgaged apartment, particularly if the borrower has no other real estate, where the kids can be moved.

Some banks will not refinance a loan if the date of its issue has not passed a certain period.

Besides, loan issue with a mortgage that was re-sold to another owner will be declined. Such information can be clarified in the bank.

There are banks that refinance only credit institutions from the special list. Each bank has its own list.

Borrower, that has present moratorium for early repayment of the loan, will receive a refusal.

So, let’s think that the credit application is approved. Then the bank will start the refinancing process. The borrower receives money to pay off the debt, and the mortgage is reissued for benefit of the bank.

To minimize the risk that exists, when mortgage is not yet renewed, and the borrower has already received the money, the bank sets during this time (three months) an increased rate. Usually, this “spurs” the borrower to issue mortgage as quickly as possible.

Five most common mistakes, made by customers of banks
they
• do not read the credit and other documents offered by banks
• do not include expenses that may arise during the refinancing
• do not count for future charges
• do not include penalties that may be imposed for early repayment
• sign documents that had never read

Six items, which must be necessarily taken into account
• Prior to the procedure of refinancing find out whether you can repay the current loan in the first bank without penalty
• Do not refinance if the resulting rate will be less then 1,5-2%
• Selecting the “new” bank, remember, that it may refuse, if the payments of the current loan were not always on time
• If you omit the time allocated by the bank for re-registration, it can demand early repayment
• To get a tax deduction of interest paid, it must be executed after the refinancing

Lots of people today are trying to overcome the problem of paying off a mortgage. Bad loan is a very important issue which might solved by refinancing. These days lending market offers different options for home refinancing for house buyers. Those who are looking for a smart option like VA refinance, please go to this VA refinance site where you will also find info about VA refinancing and how to low down payments.

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