How to Refinance Your Mortgage

Filed Under Mortgages

Do you want to refinance your mortgage loan but you just don’t know where to start? Well, you’re in luck. Here’s a short guide to refinancing.

First off, there are different reasons why you would want to refinance your mortgage. You might choose to refinance because of lower interest rates compared to your existing mortgage. The lower rates translate into lower monthly payments. And that in turn gives you more money in your pocket at the end of each month.

You also might want to refinance a mortgage because you want to move out of your variable interest rate and into a fixed interest rate. Variables rates are more volatile and can sometimes adjust to a much higher rate and payment in a short amount of time. When that happens, your cash-flow really takes a hit. A fixed rate loan gives you peace of mind knowing that your payment won’t change.

But no matter what reasons you may have for refinancing your mortgage, it’s important that you know the basic steps involved so you know how to refinance. It’s not a very difficult process but it’s foreign to most people – there’s so much paperwork involved and a little bit of mystery too. Having a short refinance guide will be a help.

There are four basic steps to refinancing your mortgage loan. The first step is to identify a reputable mortgage broker. Loans obtained through mortgage brokers can be a little more expensive than loans you obtain by directly working with a bank or savings and loan, but they can just as easily save you money too, not to mention time. Mortgage brokers work with a lot of different lenders and know which ones have certain kinds of loan offers that might match up with your needs. They’ve already done the leg-work.

The best way to locate a good broker is through a referral from a friend or someone you trust. Nothing beats a first-hand referral. It not only gives you confidence but it tells the broker that they’re working not only for your business but more future business as well. Don’t just pick someone out of the phone book; get a referral.

The next step is to put all of your financial paperwork together before you meet with the broker. That means all of your paycheck stubs, tax returns (for the last two years), bank records, and basically every creditor record you have. Organize it so you can answer any question your broker might have.

Now you’re ready for the third step, to meet with the broker and determine what you might be able to afford and not afford. You can fill out a short application so the broker knows what they have to work with. And you can let the broker know exactly what you’ll accept and not accept. Then it’s up to the broker to try to find you the best deals. He or she should come back to you with more than one.

The fourth and last step is to compare the deals carefully. You’ll need to compare not just the interest rates and the monthly payments but also the out-of-pocket expenses you’ll have to pay for the loan itself. Don’t be afraid to bargain a little bit here as well. There’s nothing wrong with asking the broker to take back your requests to the lender – all they can say is no.

If you attack your refinance in this way you’ll save time and probably save money too. When you refinance your mortgage you need to have a little patience and it helps to enjoy (at least a little bit) the paperwork details. And when you’re done with it all, you’ll have confidence that you got your best deal.

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how to refinance your mortgage, refinance your mortgage, refinancing your mortgage

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