You might be able to improve the terms of your mortgage by refinancing, and it isn’t that hard to do. If you’re considering taking advantage of lower rates, swapping a fixed-rate mortgage for your adjustable loan (or vice versa) or cashing out some of your home equity, these five steps can help you navigate the refinance process.
- Determine if you should refinance. Refinancing is one of those things that shouldn’t necessarily do just because you can. Your decision depends on your objective, your timeframe,
and your profile. First, you need to know what you’re dealing with – your current rate, program and payoff. Then use a refinance calculator to see how your loan stacks up against refinance mortgages
- Find a lender. There are several ways to find mortgage lenders. The old-school way is to get out the yellow pages and start dialing. A more efficient method is to get quotes from lenders online, then interview two or three of the most competitive. You’ll want to be comfortable with the person who helps you choose and apply for your mortgage refinance.
- Choose a refinance program. Chances are good that more than one refinance program will work for you.a The 15-year fixed loans accelerate your payoff and come with lower rates but higher payments than 30-year loans. 30-year fixed rate mortgages are safe and make budgeting the easiest. And hybrid ARMs come with the lowest rates, which arae fixed for 3, 5, 7 or 10 years. In addition, homeowners with little equity may want to explore government refinance
mortgages and streamline refinance programs.
- Apply for your refinance. You’ll have to complete an application with a mortgage loan officer or broker and probably document your income and assets. Unless your refinance is a
streamline program, your home will be appraised. This is where it pays to have an experienced professional working with you to get your refinance approved – good ones head off most of the eleventh-hour surprises and help you close your loan smoothly.
- Lock in your refinance rate. Mortgage rates move with financial markets and can change several times a day. If you want to lock in a target rate, you may have to move quickly. Don’t want to be glued to the financial news ticker all day? No problem – check out the LendingTree’s Look Before You Lock tool, which tells you if the rate you’ve been offered is a good one.
Every step of the way, LendingTree is there to educate you and make sure that you’re confident about getting a great deal on your home loan. You’ll find more detailed information about each step as well as loan calculators and other tools designed to help you: