Depending on the state of mortgage markets or changes made in your real estate financing goals, making the decision to refinance an existing mortgage may something worth looking deeper into.  When moving forward with refinancing you are actually replacing your existing mortgage with a brand new loan.  The application process should very similar to the requirements needed for your previous mortgage depending on the new lender’s policies.

Finding the right time to refinance is a personal decision you will have to make.  When evaluating if it’s the right time for you, it’s safe to consider refinancing if you can obtain a rate that is 1/2 % to 5/8 % lower than your current interest rate.  As financial circumstances sometimes dictate decisions, keep a close watch for fees associated with refinancing.   A quick decision based on “rate shopping” may change the dynamic of how you use home equity in the future.

Refinancing can achieve your financing goals by:

When refinancing a mortgage, consider the following:

Loan Terms:  The most common is a 30-year term, however other options are available.  There are 20, 15, and 10 year mortgages available.  40-year mortgages have even been offered by select lenders to reduce monthly payments.  The interest paid over the life of the loan should always be taken into consideration no matter how attractive the monthly payment might be.

The Application Process:   Before applying you should have your personal information ready such as addresses, social security numbers of all borrowers, income verification (W2’s, W4’s 1099’s, etc) records of assets, records or debts or financial obligations, credit references, and the information on the property.  The lender will generally assist with the appraisal process and title information if you do not have access to that information.

Processing / Closing:  Throughout the loan process you will probably be dealing directly with your lender.  Make sure you are aware of any documentation you will need to show before or at the closing.