09/24/2010 Refinancing is very similar to taking out an original home purchase mortgage loan. But if you have an improved credit score and home equity built up, you'll be able to take advantage of the best refinance rates available. This can potentially save you a huge amount of money over the course of your loan or can at least get you better terms.
A refinance is actually very simple. The main steps in the process are outlined below.
1. Find a lender. You may want to work with your current lender. This is fine, if he or she is willing to offer you a different loan package with different terms. If not, you'll need to find a new lender. Compare mortgage rates offered by various lenders in your area. Compare loan terms and other variables. Find a lender who will offer you the terms you need.
2. Get your home appraised. Just as with an original mortgage, your home value will have an impact on the amount of money you can borrow. If you want to take out cash from your home equity, the lender will need to confirm the value of your home. You will likely be able to roll the cost of the appraisal into the total mortgage amount.
3. Close. You'll have to pay closing costs on your new loan. These costs often take borrowers by surprise when they refinance. Closing costs on a refinance can actually be fairly significant. Ask your lender what the closing costs will be before you begin the refinance process in order to confirm that you can afford the new loan.
These are the three primary steps in the mortgage loan refinance process.
