Mortgage refinancing essentially involves taking out a new home loan to replace the current one. Often, people refinance to lower their interest rate, tap into the equity in their homes, or reduce the monthly payments. If you are looking to refinance your loan, here’s how to go about the process.
When Should You Consider Mortgage Refinancing?
To Reduce The Monthly Payment: If your financial situation has changed since when you got your home loan, you may want to refinance to a new loan with a lower monthly payment.
To Repay The Loan Faster: You can also choose to refinance to a loan with a shorter term if you want to repay your loan faster.
To Opt-Out Of Fha Mortgage Insurance: When you get an FHA loan, you will need to continue paying for mortgage insurance for the duration of the loan term. If you want to get rid of this insurance, you can refinance to a conventional loan.
Using A Mortgage Refinance Calculator
If you’ve decided to refinance your mortgage, it’s best that you use a mortgage refinance calculator to know if the move makes sense, financially speaking. To use a mortgage refinance calculator, you’ll need to know your new loan amount and interest rate. Once you input these details into the calculator, you will be able to view your monthly savings, lifetime savings, and the new monthly payment.
Steps To Refinance Your Mortgage
Shop Around: Compare different mortgage loans and keep an eye on the interest rate charged, fees, and loan terms.
Apply For Pre-Qualification: Consider applying for pre-qualification to multiple mortgage lenders within a two-week period. Once you are pre-qualified, you will have a more accurate picture of different loan offers.
Choose A Lender: Compare the different loan offers you received and pick the lender that has the best interest rate and fees. It’s also a good idea to lock your interest rate at this point.
Close On The Loan: Lastly, you’ll want to complete the application process and pay the closing costs.
Refinancing your home loan is not a complicated process. However, ensure that you are well aware of the terms and conditions of the new loan before making the switch.