There are a variety of ways to refinance. According to Tom Champion, manager of the Lutherville branch of Norwest Mortgage, those include:
* A standard refinance. "You go to the lender, provide them with all the documentation that relates as to income, assets and they will appraise the property and you basically go through the same scenario as when you first purchased the property, as far as qualifying," Champion said.
* A streamline refinance. In this method, the lender will require limited documentation and verification on such items as income, savings and debt from the homeowner.
* FHA streamline refinance. There is no income verification. There is no asset verification. There is no credit verification. But the current mortgage has to have been paid on time for the last 12 months with no 30-day-late payments. The client is responsible for the payment of closing costs and prepaid items.
Also with FHA, a consumer can get a "streamline refinance with an appraisal." FHA will reappraise the property, and if the house appraises for a higher value than the original purchase price, the consumer can then roll the closing costs into the new transaction and increase the loan amount to include the closing costs.
* Special lender refinance programs. An example is Norwest's "Timesaver" program. "We will transfer the escrows [for taxes and insurance] from the old account to the new account. We will not verify income, assets nor will we appraise the property. And we will not verify credit except to see if the mortgage has been paid," Champion said.
* Rate modification. For a fee -- between $250 to $500 -- homeowner can contact the lender and request that the interest rate be lowered. This is usually done by smaller lenders that keep the loans they originate.
According to Kevin Michno, senior vice president for Mercantile Mortgage Corp., it's a good idea to start collecting documents as soon as possible.
"If the consumer comes in with their pay stubs, bank statements, W2s, that tells you everything you need to know," Michno said.
"Even if people are thinking about [refinancing] they should start to collect that information now, so when they do make the decision to finally go for it, then they are practically done. All they have to do is get the credit report and appraisal."
Pub Date: 10/11/98