Topdot’s step-by-step guide outlines all you’ll go through when refinancing or obtaining a home equity loan or line of credit. Click on any link below to jump to a particular section, or scroll down to read each topic in order. Or, click here print this page.

1. Determining what’s right for you
   
2. Talk to a Topdot mortgage specialist.
3. We’ll run a credit check and do some paperwork.
4. We’ll help you select the mortgage that’s right for you.
5. You’ll get an appraisal of your current property.
6. You’ll send us important documents and we’ll finalize paperwork
7. You’ll attend the closing (usually at your current residence)
8. Things you should do post closing.
   
   

1. Determining what’s right for you

First it’s important to understand the definition of these terms:

• Refinancing means replacing your current mortgage with a new one.
• Cash-out refinancing is a replacement mortgage that allows you to borrow more than just the principal left on your original mortgage, so that you can use some of it as cash.
• Home equity loans are in addition to your original mortgage and are often called “second mortgages.” With a second mortgage, you receive a lump sum that gets deposited into your bank account. You payback a home equity loan in regular monthly payments, in addition to your first mortgage.
• A home equity line of credit (HELOC) is a mortgage, usually secured as a second or junior lien against the property. Initially, there is a draw period during which the HELOC behaves like a credit card, except the security for the note is your home. You can pay it off, pull more money out, or make partial use of the total available money at any point. An added benefit, unlike credit cards is that the interest is usually tax-deductible and the rate is usually much lower. You can choose to take the entire amount in one lump sum at closing or draw on it like a checking account. You pay interest only on the portion that you draw. HELOC rates are tied to the prime rate and are variable.

There are many in the mortgage industry that will tell you a home equity loan or line of credit is less expensive and faster than refinancing. This type of thinking is based on shallow knowledge and may not have your best interest in mind. At Topdot, we recommend that you first make sure you’re in the right first mortgage before considering a second one. You may be paying too much or have a term that isn’t right for your situation. Plus, having more than one mortgage means multiple banks to deal with and multiple payments to make each month. Refinancing may enable you to improve your first mortgage and build in the cash you need. It’s a double win.

When is refinancing not a good idea?
Here are some quick criteria that will help determine when refinancing might not be right for you:

• When, despite lower interest rates, you will not have a lower monthly payment.
• Your credit has greatly deteriorated since your first mortgage. You may not qualify for a low interest loan.
• You are almost finished paying off your mortgage. If you are within 10 years of paying off your mortgage, much of your payment is going toward principal, not interest. You'll be spending thousands of more dollars on interest if you refinance at this point.
• Think carefully about your reasons for refinancing and getting cash out. For instance, if you use the money to go on a vacation, you will be paying for that vacation over the next 15 or 30 years of your mortgage. You’ll need to decide if ultimately it is worth the extra interest and closing costs.

Once you establish that there’s not a better alternative to your first mortgage, you know you need a home equity loan or line of credit. But you don’t have to make this determination alone! Move on to Step 2.

2. Talk to a Topdot mortgage specialist

Topdot mortgage specialists are here to guide you through this process. No matter how much you know about refinancing or obtaining home equity loan, get one of our mortgage specialists involved as early in the process as possible. He/she will answer any of your questions, help you anticipate issues that may delay or inhibit your loan, and advise you on what product is best for you.

There are several ways you can get in touch with us:

• Call us at 866.610.8368
• Jumpstart the process by filing out our DotMatrix online.
• Chat live online with a mortgage specialist. Click here to go to our online chat.
• Let us know when you’d like us to call you. Click here to fill out a call request form.

Because we don’t believe in just giving you a generic rate and term, your Topdot mortgage specialist will spend some time really getting to know your needs and situation. The legwork done here will make the process go more smoothly in the long run. So be sure to disclose everything at this time. Important things to mention include:

• Who is on the title of your current house.
• Have you used this property as collateral for anything else.
• Who besides you will be a decision-maker in this process. (It’s important to get everyone involved early on.)
• Your martial history, including past marriages, and children you are responsible for.
• All of your assets, including things you might not immediately consider relevant assets (like expensive jewelry or a prize-winning full-breed dog) that.

Once we compile a profile of your situation, we’ll be able to get right to work on some options for which you qualify and that make sense for you. In order to continue with the process, we’ll need some key facts about you, like your social security number. Rest assured that Topdot honors the privacy of our clients and will not use this information for anything but processing your loan.

3. We’ll run a credit check and do some paperwork.

This is the part of the process where you can sit back and relax. We’ll be hard at work reviewing your credit score, doing some paperwork and developing some mortgage options that meet your needs. Topdot knows that time is of the essence, so we will be able to get back to you in a matter of a couple days, if not hours.

At this time, we’ll also send you disclosure statements, which all mortgage companies are required by law to send their borrowers. The rates and fees disclosed in these documents represent a preliminary estimate based on our initial discussions with you. The rate and fees associated with your loan are subject to change.  As we get closer to the actual loan closing, we will update you on all material changes to the rates, fees and terms associated with your loan. You’ll need to sign these documents and send them back to us.

4. We’ll help you select the mortgage that’s right for you.

Soon after our initial call, we’ll get back in touch with you with your mortgage options. In most mortgages, there’s a trade-off. If you want or need a longer term in which to pay off the loan, this comes with a higher interest rate. No matter what your situation, your Topdot mortgage specialist will come back to you with some options that he/she will talk through with you.

5. You'll have an appraisal done on your current property

An official appraisal by a third-party vendor is needed to understand what your house is currently worth. We will put you in touch with an appraiser in your area so that you can schedule an appointment. Be sure to do this as soon as possible, as it may take several days or weeks to get an appointment, depending upon your area. The cost of the appraisal is nominal but is your responsibility.

6. You’ll send us important documents and we’ll finalize the paperwork

Once you decide which loan is right for you, we’ll need to finalize the loan package. You won’t be approved for your loan until a complete loan package is submitted. To do this, we’ll request certain documents from you, depending on what type of mortgage you’re requesting.

7. You’ll attend the closing (usually at your current residence)

Your closing date - also known as your settlement date - will be assigned once your mortgage loan has been approved.

Closing costs
Prior to closing you should receive a “good faith estimate” of what closing costs you can expect at settlement. These costs need to be paid at the closing, usually by certified check. Closing costs vary by area, but generally cover:

• Attorney’s fees
• Escrow fees
• Property taxes
• Loan origination fee
• Recording fees
• Survey fee
• Title insurance
• First premium of mortgage insurance (if applicable)
• Paid receipt for homeowners insurance policy
• Loan discount points
• Document preparation fees 

Papers you will sign at closing
There are lots of papers to sign on closing day, and they vary according to location and lender. Be sure you understand all the documents. Among the papers you will need to sign are:

• Original note and deed of trust or mortgage
• Mortgage note
• Escrow instructions
• HUD-1 Settlement Statement
• Lender's Escrow instructions
• Real Estate Settlement Procedures Act (RESPA) Documents
• Truth in Lending Disclosure Statement (TIL)
• Warranty Deed
• Escrow Analysis
• Tax Authorization

Your closing step-by-step
Closings usually follow a standardized process with room for negotiations (such as unreported problems encountered in the final run-through) if necessary.

1. Present the receipt of your homeowner’s insurance to the lender.
2. Review and sign the HUD-1 settlement statement with the seller and closing agent.
3. Review and sign remainder of documents.
4. Establish an escrow account to cover taxes, insurance, interest and private mortgage insurance if applicable.
5. Review and sign mortgage or deed of trust.
6. You will receive the title to the property.
7. The attorneys, and escrow and title company will record the legal documents.
   
   

8. Things you should do post closing.

Once you've settled in to your new home, remember to do these things to make home ownership easier.

• Keep your mortgage paperwork and title in a safe, secure place, like a fireproof file cabinet that can be locked.
  
  
• Mark your calendar with the date and amount of your first mortgage payment. Since you're not in the habit of making this payment, the first one could slip your mind. Avoid late fees and a blemish on your credit record by making your payments on time.
  
  
• Refer your friends and family to your Topdot mortgage specialist. Word of mouth is important to our business and enables Topdot to continue to provide hassle-free, straightforward mortgages to people nationwide.