Living Quarters

How to Refinance Your house: All About Home Refinancing

March 4, 2020

Learn about how to refinance your home and what to expect from the process here!

What is a mortgage refinance?
Refinancing your mortgage basically means that you are trading in your old mortgage for a new one. The new loan pays off the old one so you’re left with just one loan and payment.

How do I refinance my home? 
A mortgage refinance replaces a home’s current first mortgage with a new mortgage.  The rates and terms may differ from the original mortgage depending on why a customer is refinancing.

How do I determine the best time to refinance?
Refinancing can be a sound financial decision if it reduces your monthly payment, shortens the term of the loan, or helps you build equity more quickly.

What are some of the benefits of a home-refinance? 
Borrowers may consider refinancing for several different reasons, but the two biggest benefits are to reduce your monthly mortgage payment and to save on the interest paid over the life of the loan.

What are the risks of loan refinancing? 
You may “start” your loan over.  If your current loan is a 30 year fixed and you refinance to another 30 years fixed, it will take a longer period to pay it off.  You are “resetting the clock” on your original mortgage and the maturity date will be later.  Sometimes an appraisal is required and if the value comes in lower than anticipated, the refinance may not be approved. 

How do I know if it makes sense for me to refinance?
If rates now are better than they were when you got your loan, refinancing might make sense for you. A lower interest rate is one of the best reasons to refinance but there should be some consideration given to moving to a shorter-term as well as the interest savings could be in the hundreds of thousands!

Should I refinance if I only plan on living in my home for a few more years?
It depends on your mortgage amount and interest rate.  It could take some time to recoup closing costs but if the savings outweigh the costs it’s a good reason to look into doing so.

What do I need to do to start a mortgage refinance? What type of documentation is needed? The refinancing process is often less complicated than the home buying process, even though it contains many of the same steps. To start a mortgage refinance an application is needed.  When you apply to refinance, your lender will ask for all the same information and documentation you gave them when you bought the home. They’ll look at factors like your income, assets, debt, and credit to determine whether you can pay back the loan.

What happens at the refinance loan closing?
The homeowner is required to sign various legal documents such as a note, mortgage, and closing statement.  The consumer must be given a 3 day right of recession which is required on every refinance of a primary residence.  If the refinance is a cash-out, the funds are distributed after the 3 day right of recession has passed.  The lender then pays off the old mortgage and the new mortgage takes its place.

Is refinancing available for FHA, VA, Jumbo, or USDA loans?

What makes Bank Five Nine a great place to refinance your mortgage?

  • We underwrite most of our own home loans
  • We provide most of the funding; we don’t rely on third parties to fund your transaction
  • We offer free pre-approvals and second opinions
  • Low closing cost options are available
  • You can apply online without needing to come into the bank

If you’re ready to get started or would like more information on how to refinance your home, please Contact a Lender or Apply Now!

Interested in learning more about the refinance process? Listen to our “That’s So Money” podcast where we discuss all things refinance!

Blog Post Guest: Sue Lorenz
Sue Lorenz is a Bank Five Nine Mortgage Lender and Mortgage Loan Sales Trainer.  Sue has worked in nearly every facet of retail banking, Sue’s focus has been mortgage lending for nearly 20 years. Her business is about building a relationship with each customer she serves. To learn more about Sue, apply for a loan, refinance, or to receive a free consultation click here.

You Might Also Like: