What is refinancing?
The term “refinance” is a bit misleading. When you refinance your mortgage, you’re not redoing it; you’re replacing your current mortgage with an entirely new loan. You could refinance with your current lender or work with a different one.
How does refinancing work?
When you refinance your home, you’ll apply in a similar way to when you applied to purchase your home. In many ways, the process is like a less strenuous version of getting a purchase mortgage. Here’s generally how it works:
- The lender will do a credit check.
- You’ll turn in any required financial documentation.
- You’ll pay for a home appraisal.
- The loan will go through the mortgage underwriting process.
- The process will be completed in an average of 30 to 45 days.
Types of mortgage refinance
There are many types of refinancing, so consider each within the context of your unique financial situation. Your goal might be to adopt a shorter loan term, or maybe your focus is to lower monthly payments. Here’s a breakdown of each.