How and Why to Refinance Your Mortgage?
Definition of mortgage refinance
A mortgage refinancing is the process of replacing your existing house loan with a new one. Many consumers refinance to lower their interest rate, lower their monthly payments, or access the equity in their house. Others refinance a property to reduce their monthly payments, eliminate FHA mortgage insurance, or transfer from an adjustable-rate to a fixed-rate loan.
Refinancing home loans, step by step
1. Set your goal. Reduce monthly payments? Shorten the loan term? Get rid of FHA mortgage insurance?
2. Shop for the best mortgage refinance rate. Keep an eye on fees, too.
3. Apply for a mortgage with three to five lenders. Submit all applications within a two-week period to minimize the impact on your credit score.
4. Compare the Loan Estimate documents provided by each lender after you apply to get the best deal. The Loan Estimate will inform you of the amount of money you'll need for closing fees.
5. When you lock in an interest rate, you can't modify it for a set amount of time. Before the rate lock expires, you and the lender will strive to finalise the deal.
6. You'll pay the closing charges that were indicated in the Loan Estimate and again in the Closing Disclosure at this time. The only difference between a refinancing and a purchase loan is that no one offers you the keys to the house at the end.
