What do I do? Where do I go? How does that work?
As a loan officer with over 16 year experience, I get asked a lot about how a mortgage refinance works. It’s common with rate drop to suddenly start hearing “you should refinance your mortgage to save money!” (and I have plenty to say about that statement!), but how?
How do you refinance a mortgage? Where do you start?
The first thing you want to do is ask yourself “why do I want to refinance?” Knowing your goals is so important to understanding how to go about the process of refinancing.
There are so many reasons to refinance.
Do you wanna shorten your term? Do you wanna lengthen your term for some reason? Maybe you’ve had some kind of life change or event? Are you looking to lower your payment? Are you looking to lower your rate? Are you looking to get rid of mortgage insurance and there's no other way but refinancing? Are you looking to change your loan type?
Maybe you have a conventional loan and now you're an eligible veteran and you'd love to switch it to a VA loan.
There are a lot of different reasons, right?
So step #1 is figuring out WHY you want to refinance. This way when you talk to a lender you can communicate your goals and they can help you figure out your options.
You can go to the person who helped you last time, if you had a great experience. You can go to a bank, a credit union, or a mortgage company. Ask friends and family who've had a great experience to give you a referral. Just find someone you trust.
Once you have a lender you trust, do an application with them.
Yes, you want to do a full application so you have a clear understanding of your options. During the application process you want to make sure you discuss your goals.
Why are you applying? What are you looking to do?
Be extremely accurate and detailed in that loan application and in your conversation with the lender.
And on your application, don’t guess. Pull your information and have your current information handy. It's crucial because what a lender is able to offer you is only a reflection of the information they have been given.
So the good thing is, most of the time (check with your lender), there is no cost or obligation to submit an application and see if you qualify for a refinance and to see if you should refinance or not.
And remember: Don't be pressured!
Take your time and make a good educated decision on whether or not refinancing is the right move for you and your family.
Educating yourself is the best way to feel confident in any decision regarding a mortgage. Reading this is a great first step!
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Every year an average of 21 million people apply for mortgages in the US, and only around 7 million close. I'm on a mission is to change that by spreading mortgage education. Sign up for my newsletter to be a part of my Mortgage Peace Movement!