The Home Mortgage Refinance Process

Dated: January 21 2021

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When rates are low, it can seem like the ideal time to refinance your mortgage. After all, who doesn’t like a lower interest rate? There are lots of good reasons to refinance your mortgage, such as adding on or trying to streamline your expenses, but what’s really involved in the process?

Mortgage Refinancing: The Basics

Perhaps the best news any homeowner can get when it comes to a refi is that it’s not likely to be nearly as difficult as getting the original loan was. Breathe a big sigh of relief if you need to; this is the time for it.

For many homeowners, refinancing happens for a few specific reasons: reducing mortgage interest, dropping mortgage insurance, or cashing out for a remodeling expense. When rates are low and values are high, a refinance can provide a double whammy financially. Dropping any mortgage insurance you’re currently on the hook for can make a big dent in your house payment, especially if waiting for it to fall off naturally would take several more years. And, of course, a lower interest rate also means you’re paying less money towards interest over time. Combine the two and it can mean big savings on a home you plan to hold over the longer term. Remodeling is a valid and effective way of adding value, as well, which has a whole lot of other benefits that come with it. In short, there are tons of ways a refi can be helpful to your financial welfare.

The Refinance Process

Much like when you got your initial loan, your mortgage banker or broker will examine your financial history and your longer term prospects, which includes your work history, to ensure you’re financially stable. Your debt to income ratio will be reexamined as well. Although these are closely scrutinized, many banks will grant a bit more wiggle room than they did for initial mortgages, especially for homeowners who have a lot of equity already established.

Once approved for your loan, you’ll choose when to lock in your rate. Because interest rates can vary from day to day, it’s important to pay close attention to both the current rate being offered and your lender’s advice in the matter. If they have noticed rates are going up, locking right away makes a lot of sense, but if you’re the gambling sort and rates are trending down, you may want to float your rate a few days to see if you can do any better. Remember, though, this is a bet that you’re taking that the rate will drop, and it won’t always pay off.


When rates are low, it can seem like the ideal time to refinance your mortgage. After all, who doesn’t like a lower interest rate? There are lots of good reasons to refinance your mortgage, such as adding on or trying to streamline your expenses, but what’s really involved in the process?

Mortgage Refinancing: The Basics

Perhaps the best news any homeowner can get when it comes to a refi is that it’s not likely to be nearly as difficult as getting the original loan was. Breathe a big sigh of relief if you need to; this is the time for it.

For many homeowners, refinancing happens for a few specific reasons: reducing mortgage interest, dropping mortgage insurance, or cashing out for a remodeling expense. When rates are low and values are high, a refinance can provide a double whammy financially. Dropping any mortgage insurance you’re currently on the hook for can make a big dent in your house payment, especially if waiting for it to fall off naturally would take several more years. And, of course, a lower interest rate also means you’re paying less money towards interest over time. Combine the two and it can mean big savings on a home you plan to hold over the longer term. Remodeling is a valid and effective way of adding value, as well, which has a whole lot of other benefits that come with it. In short, there are tons of ways a refi can be helpful to your financial welfare.

The Refinance Process

Much like when you got your initial loan, your mortgage banker or broker will examine your financial history and your longer term prospects, which includes your work history, to ensure you’re financially stable. Your debt to income ratio will be reexamined as well. Although these are closely scrutinized, many banks will grant a bit more wiggle room than they did for initial mortgages, especially for homeowners who have a lot of equity already established.

Once approved for your loan, you’ll choose when to lock in your rate. Because interest rates can vary from day to day, it’s important to pay close attention to both the current rate being offered and your lender’s advice in the matter. If they have noticed rates are going up, locking right away makes a lot of sense, but if you’re the gambling sort and rates are trending down, you may want to float your rate a few days to see if you can do any better. Remember, though, this is a bet that you’re taking that the rate will drop, and it won’t always pay off.

Need Help Finding a Lender?

If you’re thinking about refinancing and need help finding the perfect lender, or looking for a second or third quote on your refi, it can be hard to know who to trust. Fortunately, your HomeKeepr community has your back where you can search for lenders who can get the job done.

MORTGAGE MORTGAGE


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