After going through the initial process of getting financing for your home, it can seem strange to want to go through it again to refinance the mortgage. You may have heard from friends or family members about the process being difficult, so you may think that it’s not worth the time and effort. But there are several benefits that can far outweigh the negatives. And when you refinance your home with the right lender, then the process can be fairly quick and simple. 

At RealMortgages in Carlsbad, California, we offer lending and refinancing solutions that strive to make it easy for home buyers and home owners. With free online tools and personalized support from start to finish, you can rest assured that your finances are in good hands. After having been through the process ourselves, we understand how overwhelming it can feel; but we’re here to provide you with the knowledge and trustworthy opinions you need to make an informed decision. If you’re thinking about refinancing your home, get in touch with the RealMortgages team today.

What is the Refinancing Process?

Refinancing your mortgage is similar to getting financing for the initial purchase of a home. Here are the basic steps:

• Applying: You can refinance with your current lender or start with a new loan provider. Either way, you’ll go through an application process that involves filling out paperwork, the lender will look at your income, assets, debts, and credit score to determine if you qualify.
• Locking in the Interest Rate: To ensure that you can get a good rate and that it won’t change before the loan closes, you can lock the interest rate for a period of time, typically between 15 and 60 days.
• Underwriting: Now you’ll enter an underwriting phase where your mortgage lender verifies information that was provided, appraises your house, and determines what options are available.
• Home Appraisal: Your lender will order an appraisal of the house to determine its value. If the home is appraised at or above the amount of the new loan, then the underwriting process is complete and you can close on the loan.
• Closing on the New Loan: Your lender will provide a Closing Disclosure, which includes the details of your new loan, and you will go to closing.

5 Benefits of Refinancing Your Mortgage

Lower Monthly Payments

With a lower interest rate, there will be a reduced monthly payment. One of the biggest reasons for refinancing is to take advantage of lower monthly mortgage payments. However, it is important to note that there are fees associated with refinancing, so you’ll want to make sure that you’re getting a low enough interest rate to make the process worth it. You can talk with your mortgage lender to determine what the best option is for you.

Change the Loan Term to Build Equity

Refinancing a home isn’t always about wanting to save money on lower mortgage payments. If you are able to afford an increase in monthly payments, whether due to an inheritance or an increase in salary, switching from a 30-year mortgage to a 15- or 20-year mortgage can allow you to build equity quicker. If interest rates are lower, you’ll also save money over the life of the loan.

Cash-Out Refinance

A cash-out refinance is when you borrow against your home equity, or when a new mortgage has a value higher than the outstanding mortgage balance. The difference between the old and new mortgage is paid out at closing and you can use these funds for whatever purpose you wish. Homeowners can use the funds for home improvement projects, to pay off debt, or even go on vacation. The amount that can be borrowed depends on your credit score and the type of mortgage, but most lenders allow homeowners to borrow up to 80% of the home’s value.

Change the Loan Type

If you opted for an adjustable rate mortgage because of the initial lower interest rates, but have determined that you would rather have a fixed rate mortgage, refinancing will allow you to make that change. A fixed rate mortgage ensures more predictable payments for the life of the loan since the interest rate will always be the same.

Cancel Mortgage Insurance

If you were unable to afford the traditional 20% down payment when you first bought the house, your mortgage lender may have required that you pay mortgage insurance. When you reach 20% equity, refinancing will provide an opportunity for removing the premium that’s built into your mortgage. You can also consider refinancing if the original mortgage was an FHA or USDA loan.

Refinance Your Mortgage With RealMortgages in Carlsbad

Even though refinancing a mortgage can seem like an overwhelming process, with the right lender, it can be incredibly beneficial. Whether you’re looking to take advantage of lower interest rates or if you want to apply for a cash-out refinance in order to consolidate debt, our team can help. We strive to provide personalized service so that you can be sure you’re getting what you need from the refinancing. Learn more about the refinancing process, see if you qualify, and get in touch with the RealMortgage team to get started!