Refinancing basics

You might be surprised to learn that a refinance application contains many of the same elements as an application for a first mortgage. The good news is that your familiarity with the process should make refinancing less stressful than your original application. The bad news is that once again you will be required to complete a lot of paperwork and pay a lot of fees. Above all, it should be an exciting process; after all, refinancing for the best interest rate means more money in your pocket.

Refinancing is the time when all of the research you put into your original mortgage pays off. You have already learned the principles of shopping around for the best mortgage. You are familiar with the industry. These are all positive reasons to refinance your mortgage.

At the same time, the reapplication process is no cakewalk. It’s a simple fact of life that paperwork is never fun. The same can be said for paying fees. As you shop for the best mortgage rate, keep in mind that your current lender might provide the best deal. To make you client, your lender may be inclined to offer you a special incentive. Even if they don’t, you might not be required to submit extensive documentation. Avoiding that hassle might be worth giving up the best mortgage rate.

Before you start shopping, you should probably have an idea of the type of refinance loan you are looking for. If you simply seek a lower interest rate, rate and term refinance will be your main area of interest. If you are hoping to finance other purchases with your home equity, another solution might prove to be more appropriate.