How to Refinance a Subprime Mortgage
- 1). Contact at least three lenders. Choose local or national banks or mortgage lenders that deal in conventional mortgage loans. Your first lender should be the bank where you have your checking and savings account. Find out what the terms and conditions of the new loan would be, including total closing costs, interest rate and monthly payments. Request an itemized list of estimated closing costs from each lender so you can see exactly what fees they are charging.
- 2). Compare the three refinance offers. Once you have at least three lender proposals, sit down and compare each offer line by line. It's not only about which lender is offering the lowest interest rate. It's also about the costs involved in obtaining the interest rate. If you're paying $2,000 more to get a lower interest rate, it might not be worth it.
- 3). Choose the best lender for you. Once you compare the costs, interest rate, term of the mortgage and monthly payments, it's time to decide which mortgage is the best one for you. For example, one lender may be offering you a 15-year mortgage while the other may be offering you a 30-year. The longer-term mortgage may be better for you because it makes your monthly payment lower. You'll pay more interest over the 30-year period, but the monthly expense may be more important to you.
- 4). Submit the application. Once you choose the lender with whom you want to refinance, it's time to submit the paperwork. Fill out the application completely, and make sure you submit it to the lender with all of the supporting documents requested. This will help speed up the processing time of your application.
- 5). Attend the closing. When you receive approval on the refinance and proceed through the processing of the loan, you'll receive a closing date to finalize and establish the new mortgage. You'll attend the closing and sign all of the closing documents to put your new mortgage in place.
