Mortgage Refinancing: A Brief Guide
When you refinance your mortgage, you’re essentially replacing your existing loan with a new one. Here’s how it works:
Application Process:
Apply for refinancing, similar to when you first bought your home.
The lender checks your credit and collects financial documents.
Conduct a home appraisal.
The loan goes through mortgage underwriting. Typically takes 30 to 45 days1.
Types of Refinancing
Rate-and-Term Refinance: Adjusts interest rate, loan term, or both.
Cash-Out Refinance: Tap into home equity for cash (useful for improvements or other goals).
Cash-In Refinance: Make a lump sum payment to reduce loan-to-value ratio, potentially lowering monthly payment and interest rate.
No-Closing-Cost Refinance: Roll closing costs into the loan, but expect higher monthly payment and possibly higher interest rate12.
Pros and Cons:
Pros:
Lower monthly payments (if rates are favorable).
Access to cash for other purposes.
Potential long-term interest savings.
Cons:
Closing costs (typically 2% to 5% of loan amount).
Timing matters (consider break-even point).
High-rate environment may not be ideal for refinancing1.
Remember, your refinancing decisions should align with your financial situation and goals. Consult a mortgage professional for personalised advice!
Home Mortgage Refinance Loans