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Refinance Purchase Home Equity

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Fixed ARM Interest Only FHA

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What Occurs When I Refinance My Mortgage?

By Kevin Landis

When a homeowner refinances a mortgage, a new first mortgage is obtained on the real estate. The old mortgage is basically traded in for a new mortgage.

Mortgage refinance process

When refinancing a home, the homeowner applies for a new mortgage. While completing the application, the home undergoes an appraisal to determine the value and the homeowner’s credit will searched. The title of the home will be ordered by the lender to search for liens that may be placed on the home. Once the homeowner’s information is verified, a date for closing will be set. At closing, a new loan agreement will be signed. Refinance loans also have a ‘three day right of rescission’. where the home owner is allowed to back out of the loan. Once this time as passed, the loan will be checked for accuracy and funds will be released.

Reasons a homeowner considers a mortgage refinance

1. To Lower a fixed rate. If a homeowner can get a new loan with a lower interest rate, payments will decrease.
2. To switch from a fixed to an adjustable rate. A homeowner may be comfortable with the changes of the interest rate and choose an adjustable rate to lower monthly payments.
3. Enhance an ARM’s features. This type of mortgage has protective caps on the payments. If a homeowner is not happy with this cap, it can be negotiated in a refinance.
4. Build equity quicker. Many times, there is a financial situation that makes it possible to increase mortgage payments. Refinancing with this change will reduce the term of the mortgage.
5. Lower payments. Refinancing a mortgage into one with a longer term lowers the monthly payment.
6. Cash in equity. A new mortgage may be taken out with a larger principal, turning the equity into cas

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3. Can I Refinance My Mortgage If I Have Bad Credit?
4. Mortgage Rates Are Low-Should I Refinance?
5. What Is A Streamline Refinance?