If you want to reduce monthly payments, lower your interest rate, or take cash out of your home, it may be time to refinance your mortgage. Due to the low interest rates available, you may also benefit from refinancing your mortgage to pay for a new car, tuition, or to pay down credit card debt. Most people refinance when they have equity in their home, however you can refinance your mortgage at anytime. Refinancing your mortgage can also be beneficial if interest rates are low so you can lock in a low rate.
Some lenders will require you have at least 12-months of consistent payment history on your current mortgage before they will refinance your loan. Additionally, the lender will want to know the current value of your home and they may ask your reason for refinancing your mortgage. To avoid paying unnecessary fees, you can check the value of your home using online appraisal sites. However, the online appraisal websites are not always accurate so we suggest you obtain 3 appraisals and use the average.
• Check with your current mortgage lender to see if there are possible penalties or prepayment fees.
• Budget for refinance fees which may include application, appraisal report, loan origination, recording, title & escrow, document preparation, and lender processing fees.
• Learn how much you can afford with our Affordability Calculator.