Switching a mortgage to another bank requires refinancing your mortgage balance all over again with a new bank. You need to apply and be approved in order for the new bank to take over your mortgage. If you are past due with the current mortgage, the new bank will reject your loan application. Before you switch, check with several banks to get the lowest interest rate available as well as closing costs.
Call the bank of your choice and submit a credit application. The bank representative will ask you some personal information, including your date of birth, Social Security number and place of employment. With your permission, a representative will take a look at your credit report to make sure you meet the bank's credit guidelines. Bad credit or too much outstanding debt may cause the bank to reject your application. A debt-to-income ratio above 36 percent is cause for a lender to reject your application.
Review the costs with the bank representative. When you refinance your mortgage, you will incur closing costs, including an appraisal fee, title insurance, credit report and points. You can roll all of your costs into the new loan which will limit your out of pocket expenses by adding it to the monthly payment.
Sign the loan documents. When you have been approved, the bank will have you sign all of the documents. There will be a three-day rescission period before the loan is complete. This gives you three business days to change your mind and back out of the loan. Make sure you keep your paperwork, received from the bank, in a secure place.
Before you apply with the new bank, try to pay down any credit card debt that you have. Also, keep in mind that any late payments on your mortgage within the last 12 months may cause the bank to reject your credit application. Banks use credit scores to assess your level of risk. The higher your credit score, the lower your interest rate will be. Lenders like to see your debt-to-income ratio go no higher than 36 percent. This ratio is calculated by taking all of your fixed monthly payments and dividing them by your gross monthly income. If your application is not denied, due to a high debt ratio, you could receive a higher rate of interest.