Steps for Refinancing Your Home

Decide if It's the Best Time to Refinance

• If refinancing for a lower rate, it's suggested the rate be 2% lower than what your current rate is. Compare the rates from different lenders, if your current lender has higher or lower interest rates and if you choose to stay with them. Another thing to think about is the valuation on your home and what it appraises for. If the housing market is bad, your house may not be appraised for what you think it is worth. Consider whether your monthly payments will be that much lower to make a considerable difference in your monthly payments.
  
  

Contact Your Mortgage Lender

• Contact your lender and let them know you are interested in refinancing your loan. They will run a new credit report and gather all the necessary information they need to begin the process. You will be sent a refinancing application to sign, much like the paperwork you had done when you initially purchased your loan. Next, your lender will send an appraiser to your house to be appraised. To get the maximum valuation as possible, be sure to complete projects and repairs, and clean your home just as if you were attempting to sell it.
  
  

Ask Questions

• Find out from your lender the exact costs that will be involved in refinancing. They won't know what your home is worth until the appraisal has been done, and they will be able to give you a rundown of all the costs associated with refinancing before you sign any final papers. You do not want any surprise costs, so ask questions if you are concerned or confused about anything. Nothing is final until you have signed during closing.
  
  

Close on Your New Loan

• If you have agreed to all the terms and costs associated with refinancing, it is now time to close on your loan. Closing can be done at a titling agency or a bank with a notary. Also, the closing on a refinance is very similar to closing on an initial loan. You can have the closing costs rolled back into your loan, or pay for them out of pocket. After closing is through, some companies offer a 3-day waiting period if you change your mind about the refinance. You have 3 days to decide if you really want to go through with the refinance. If you change your mind for any reason, the papers can be discarded and you can keep your original loan. If you go through with the closing, your old loan will be paid in full by the new loan.