When it comes to refinancing, it can often be hard to figure out the best place to start.
We will give you everything you need to know about refinancing your current home, so you know what to expect every step of the way.
Pro Tip: A Homeownership Strategy Meeting is completely free through Churchill Mortgage!
Since there is so much to think about when you refinance, it is crucial that the process is as easy as possible without being completely automated and impersonal. We want to help you avoid common refinancing pitfalls that many homeowners experience.
Refinancing is the process of getting a new mortgage so you can lower your interest rate, reduce monthly payments, remove mortgage insurance, or change your loan term or loan type.
The number one reason people refinance is to lock in a lower interest rate. Why? This can potentially save you hundreds to thousands off your total mortgage payment.
You may not realize there are other great reasons to refinance:
If your original down payment was less than 20%, you are probably paying PMI. Your home could now have enough equity to refinance and remove it.
You may want to adjust your term (i.e. 30-year to a 15-year loan) to save money on interest and build wealth. This is a great option if you are interested in debt-free homeownership.
Maybe you didn’t qualify for a specific loan program when you first purchased your home, but now you do. If you currently have an FHA or ARM loan, it may be worth looking at conventional, fixed-rate mortgage options.
A lower monthly payment is typically achieved by refinancing into a lower interest rate, or a longer loan term. Refinancing this way can affect the amount of interest you pay, so it’s important to consider the total cost when refinancing.learn more
With a lower interest rate, and by shortening the term of the loan (and making fewer total payments), you can reduce the overall amount of interest you'll pay over the life of the loan.learn more
It is important to see if you can benefit from any of these refinancing reasons so you can align your mortgage with your financial goals. Reach out if you need help with the next step.
Refinancing can be a vital step in paying off your loan early and becoming debt-free. Whether you’re looking to convert to a fixed-rate mortgage or lower your loan term, we’ll help you find the home loan you need.
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The most important part of understanding the mortgage process is finding a lender who understands you and your home loan goals (like saving time and money). Here is a quick and easy view of the refinancing process:
First, you submit your mortgage application. This lays the groundwork for your Home Loan Specialist to be able to give you accurate interest rate quotes and down payment options.
After your application is completed, you’ll start getting your home inspection and appraisal under wraps. This is when you’ll be asked for any additional documentation to close your loan, if you haven’t already provided it.
Your new home loan will go through underwriting. This just verifies all conditions on your loan are approved and then you will be issued a “clear to close.”
The underwriter will issue your final approval, process your closing paperwork, and schedule your closing date and time. On your official closing day, you will have a lot of documents to sign. Your old loan will be paid off, and your new mortgage will be funded.
Because the interest rate on your home loan is directly tied to how much you pay on your overall mortgage, lower rates usually mean lower monthly payments.
Check out this example of monthly payments (principal and interest) on a 15-year fixed-rate loan of $250,000 at 5.5% and 4.0%.
With a 1.5% difference in interest rate, there is a $34,827 difference in interest paid! Imagine what you could do with that in your pocket!
With so much of your hard-earned money on the line, it’s best to seek advice from a trusted home loan expert and have the confidence that you are in qualified hands.