- 1). Gather together your documents once your new construction home is complete. You will need a certificate of occupancy, and the documentation on your original construction loan. Look over your loan documents to see what the stipulations of the loan are. In some cases, you may be able to continue paying the interest only on your loan for a year after the home is complete. In other cases, you may be required to refinance into a fixed loan as soon as you occupy your new home. Make sure you read the documents so you will know how soon you need to refinance your loan.
- 2). Check your original construction loan to confirm that there are no pre-payment penalties. In some cases, people have to pay a fee if they pay off their loan before an allotted amount of time. Pre-payment penalties are generally one to two years for a refinance. If you have a pre-payment penalty, you will want to figure out the dollar value on the penalty to make sure it is worth it to refinance now. This information will be included in your construction loan note. Penalties are typically 2 percent of the outstanding balance on the loan.
- 3). Contact a loan officer and ask about current interest rates. You will have to provide the officer with your taxes, insurance, the appraised value of your home and the balance on your construction loan. Also inform her if you have a pre-payment penalty. Have the officer run the numbers for a refinanced loan.
- 4). Meet with the loan officer to see what your refinanced mortgage payment will be, in addition to your closing costs and the new terms of your loan, whether it be a 30-, 20- or 15-year loan. If you are pleased with your new monthly payment, go ahead and fill out an application and sign it. You will need to provide documentation, including a paycheck, two months of bank statements, two years of W2 forms, two years of tax returns, your mortgage statement, the original note, your license and social security number. The officer will take the steps to make sure you qualify for the new loan.
- 5). Attend the closing set up by the loan officer once you are approved for the loan.
SHARE
