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7 Steps to follow while refinancing your current mortgage

Posted on: 13th Sep, 2004 01:01 am

Refinancing is a good option that can help you to get rid of high interest debts. But you can only benefit from it if you can secure a lower rate on your loan and also make minimum payments to the lender. You can try shopping for some of the best rates and costs while you are into refinancing. Besides, an awareness of the entire loan process also helps you get through the deal easily. This article contains an overview of the refinance process in simple steps so that it will be easier for you to interpret what the process is all about.


Steps to follow:

  1. Decide how long you are going to stay in the property.

  2. Contact your first lender and find out what he has to offer. Otherwise start shopping with other lenders.

  3. Get pre-qualified for the loan
    • Decide upon the type of mortgage

    • Check out the factors that may influence the interest rate on your loan. These are:
      1. Your credit score.
      2. Loan amount.
      3. Number of points paid.
      4. Lock-in-rate.

  4. Compare the interest rate on offer with that of your existing loan.

  5. Get pre-approved with a lender.
    • Calculate the monthly loan payments

    • Subtract new payments from current monthly payments. The difference gives you the savings that you can earn by getting a low rate.

    • Divide the monthly savings by the total closing costs. That gives you the number of months within which you can recover the closing costs. This time period is known as the Break-even period.

    • Compare the months obtained with the time period you're staying in the house. If it exceeds the time period, then refinancing may be a good choice.

  6. Follow the simple steps that will take you to loan closing, that is, towards finalizing the deal.

  7. At closing time you'll have to sign the loan documents and the mortgage note. Besides, you will have to pay for the closing costs and prepayment penalty.

Related Readings
If my interest rate is 6.375 now, how low would it need to be to make a difference in my payment?
Posted on: 23rd Jul, 2009 02:35 pm
Anything less than 6.375% will help you in lowering your payments. At present the interest rate for 30 year mortgage is around 5.30%. If you refinance now, you may get an interest rate of 5.30%.
Posted on: 24th Jul, 2009 12:02 am
Do you think the interest rate is going to drop back down below 5%
Posted on: 28th Jul, 2009 06:49 am
let me check my crystal ball...

drat! it's broken! oh well, crystal balls don't work anyway.

that's about how well we can estimate interest rates, too. there are far too many factors that come into play concerning rates, etc. and there's no way that any predictions you'll get will be based on fact - it's all conjecture.
Posted on: 28th Jul, 2009 07:25 am
refinancing on a 6.75% interest only loan to a 5.25% fixed rate loan , but have allready paid $85,000 the past two years in interst payments on original loan of $500,000. does it make sense to refinance to the 5.25% fixed rate?
Posted on: 15th Sep, 2009 06:26 pm
Hi fred!

Welcome to forums!

It will depend upon the fact as to how long you want to stay in the property. If you want to keep the property for the next 5-8 years, then it can be a good idea refinancing the loan at a lower rate. But you should remember that you will have pay the closing costs while you refinance the loan.

Feel free to ask if you've further queries.

Sussane
Posted on: 15th Sep, 2009 10:17 pm
paying interest only is counter-productive. refinancing to a much lower rate makes a great deal of sense.
Posted on: 16th Sep, 2009 06:36 am
I have a first and second on my home. The first is 200K and the second is 60K. My interest rate is 7% on first and 10% on second. My home is probably worth about 215K right now.

Can I just refinance on the first? I went to my bank and they were talking about only going 95% LTV and Obama's 105% thing. Can you explain more of this to me?
Posted on: 03rd May, 2010 04:41 pm
This information is very helpful. Thanks for posting.
Posted on: 03rd May, 2010 06:25 pm
Hi Guest,

As you don't have equity in your property, you won't be able to get a refinance. The lender would refinance your property only if there is around 20% equity in it. You can check out the given page in order to know about the Home Affordable Mortgage Refinance (105% refinance):
http://www.mortgagefit.com/problems/homeaffordable-refinance.html

Take care.
Posted on: 04th May, 2010 03:20 am
can u get a loan if u are behind on mortgage
Posted on: 13th May, 2010 08:02 am
Hi Guest!

Welcome to forums!

If you are behind on your mortgage payments, then you won't be able to refinance it.

Feel free to ask if you've further queries.

Sussane
Posted on: 13th May, 2010 11:43 pm
How long after you purchase a property can you refiance to bring down your monthly payment? Also will the monthly payment be lower if additional downpayment is made?
Posted on: 08th Jun, 2010 06:43 pm
Hi Flex,

You will have to wait for a year in order to refinance your newly purchased home. Additional down payment may help you in lowering your monthly payments.

Thanks
Posted on: 09th Jun, 2010 12:14 am
i need to refi to keep my house but it appraises now for about 82g's and i owe about 116. credit is not good but i don't want to loose my house. it's actually my childrens, not mine! any suggestions on finding a lender willing to work with me?
Posted on: 19th Jun, 2010 03:03 pm
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