What Does It Mean to Refinance?
Refinancing is simply the act of taking out a new home loan to pay off your current one. While that seems counterintuitive, doing so can actually help you save money either through lower interest rates or lower amount owed. Sometimes, as the value of your home increases, you may refinance to take extra money out of your home. Some investors use capital from the home as a downpayment on an investment property.
Benefits of Refinancing a Home Loan include:
- Lowering your monthly mortgage payments
- Removing the private mortgage insurance requirement once you've got 20% equity in your home
- The ability to change the length of your mortgage
- Refinance from a higher interest rate to a lower interest rate or from an adjustable mortgage to a fixed-rate mortgage
- Getting equity out of your home to work through a life change like divorce or to payoff other debt
- VA-loan recipients can cash-out their loans by refinancing 100% of a home’s current appraised value
- The ability to borrow based on increased equity in the home.
The Refinancing Process
Refinancing a home loan is very similar to applying for an initial mortgage. Here’s an overview of what you can expect:
Step 1 - Apply for a Mortgage
First, you have to go through a loan application process and supply your lender with financial documentation detailing your income, debts, and assets.
Step 2 - Get Loan Estimates
After a few days, we'll provide you with an overview of your loan options and the costs associated with refinancing.
Step 3 - Wait for an Appraisal
Once you’ve selected a loan program, we'll order an appraisal to determine your home’s current market value.
Step 4 - Receive a Final Decision
Just as with your original mortgage, your refinance loan will go through underwriting, where a loan processor will review all your information and issue a commitment to provide you with your new loan.
Step 5 - Attend Closing
Just like when you bought your home, you’ll go to closing and sign all the loan documents to make your new loan official.
If you think you might be ready to refinance, our team is ready to assist you. Contact us today to get the process started or Apply Online.