How to Take Out a Home Mortgage on a Home You Already Own
Taking out a mortgage on a house you already own will involve refinancing with a home loan lender. Refinancing serves multiple purposes. For example, owners refinance in order to acquire a better mortgage, lower the interest rate, remove someone's name from the mortgage or acquire cash from their equity. Applying for a refinance isn't a guaranteed approval. You must qualify for mortgage financing again. You can learn what it takes to get a mortgage refinance and take out a new home loan.
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Instructions
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Review credit to see if you meet the criteria for a mortgage refinance. Taking out a mortgage on a house you already own does require a good credit history. Check your personal history by getting a copy of your credit report from Annual Credit Report and by ordering your credit score from the MyFICO website (see Resources). A good score for refinancing is 680 or higher, and a score 740 or higher is necessary if you're looking for the cheapest interest rate. Eliminate consumer debts (or lower the balances), and establish a good payment record to build a high score.
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Fax or send copies of documentations to verify income. Rechecking personal finances or income is typical when taking out a new mortgage loan. Keep accurate records of your W-2's and other tax paperwork to show your home loan lender. This information is the basis for determining affordability.
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Compare refinance options for the best mortgage loan. Ask for a free rate quote from your home loan lender, if applicable, and then request loan information from one or two other mortgage providers. Taking the time to comparison shop ensures receiving the best loan and the cheapest mortgage rate.
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Set up a home appraisal with your lender. The mortgage lender selected to take out your new home loan will send an appraiser to your home to determine the property's worth. You will need a minimum of 3 to 20 percent equity in the home to be eligible for a mortgage refinance (equity requirements depend on the type of loan product).
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Arrange to pay your closing costs. Closing or settlement fees are unavoidable when refinancing or taking out a new mortgage loan. Plan to provide up to 6 percent of the loan balance to your lender when closing on the new mortgage. Use your own cash to pay closing fees or finance the fees into the new mortgage.
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