You've probably heard it often --
another friend or neighbor has refinanced and is enjoying lower monthly mortgage
payments. You may have read headlines that talk about mortgage interest rates
reaching historical lows. So, you ask, is now the best time to refinance my
Refinancing is essentially paying off your existing mortgage and taking out a new one. This section discusses the basics of refinancing, such as the reasons for refinancing and the steps involved. It also discusses your financing options.
Homeowners choose to refinance for a wide variety of reasons. Some of the most popular ones are to:
- obtain a lower interest rate,
- build equity faster,
- change loan type,
- take advantage of an improved credit rating, or
- draw on equity already built in the home.
To help determine if you're ready to refinance, ask
yourself these questions:
Because refinancing involves many of the same steps that you followed to get your current mortgage, you may already know what to expect. You may, however, face a few additional steps and different types of expenses.
Similar to the traditional mortgage process, a lender will require you to complete a loan application. The application assesses your financial situation, credit history, the property value, the amount of equity in your home, and other data.
The lender will require
To help determine if you're ready to refinance, ask yourself these questions: