Before starting a refinance, determine what you want to accomplish and whether the potential benefits justify the costs.

Common reasons to refinance include lowering your interest rate, changing your monthly payment, shortening your loan term, or accessing home equity. Your options depend on your current mortgage, financial situation, property, and loan eligibility.

For a rate-and-term refinance, compare the estimated costs with the potential savings to determine your break-even point. If you’re considering a cash-out refinance, also evaluate how increasing your mortgage balance may affect your long-term finances.

Explore Types of Mortgage Refinances to understand the available loan structures.

The refinance process generally follows these steps:

1. Complete a Refinance Analysis: Review your current mortgage, goals, estimated costs, and potential savings.
2. Get Pre-Qualified: Discuss your financial situation and determine which loan options may fit your needs.
3. Send Documentation: Provide the requested income, asset, mortgage, and property documents.
4. Complete a Loan Consultation: Review your loan structure, estimated payment, and closing costs before proceeding.
5. Start the Loan Process: Complete the application, disclosures, processing, and underwriting requirements.
6. Prepare for the Appraisal: If required, arrange the appraisal and provide relevant information about your property.
7. Close and Fund: Sign the closing documents and complete any applicable waiting period before funding.
8. Complete Post-Closing Steps: Confirm your first payment date and follow up on any remaining items, including your previous mortgage’s escrow balance.

Learn more about the Mortgage Loan Process and review the Mortgage Document Checklist to prepare your paperwork.

When reviewing a refinance estimate, it’s important to understand the difference between closing costs and prepaids.

Closing costs are fees associated with obtaining the new loan. Prepaids cover expenses such as property taxes, homeowners insurance, and interest that you would generally owe regardless of whether you refinance.

You may also need to establish a new escrow account for taxes and insurance. If your existing mortgage has an escrow account, the remaining balance may be refunded by your current servicer after the old loan is paid off. That refund is separate from the funds needed to close your new loan.

Review the numbers carefully to understand the costs of refinancing and how much money you may need at closing.

• Closing Costs
• Prepaids and Escrows for Refinances

Your current mortgage payoff and your new monthly payment both affect the final numbers of a refinance.

Understanding your payoff: The payoff amount may be different from your current principal balance because it can include accrued interest and applicable fees. The final amount must be confirmed with your current mortgage servicer.

Reviewing your new payment: Your monthly payment depends on the new loan amount, interest rate, loan term, and whether taxes and insurance are included through escrow.

A refinance may change when your next payment is due, but a skipped payment does not mean the interest disappears. Review the payoff and payment schedule so you understand how your existing loan transitions to the new one.

Read Refinance Payoff Calculations & Payments for more details.

Depending on the loan program and transaction, a refinance may require an appraisal to evaluate the property’s value. The appraisal can affect your available loan options, and the fee may still be owed if you decide not to proceed after the appraisal has been completed.

Review our Refinance Appraisal Guide to learn how to prepare.

Before closing, make sure the information on your loan documents is accurate. Let your lender know if anyone has been added to or removed from the property title since you purchased the home, as this may affect the closing documents.

After signing, the timing of funding depends on the transaction. Certain refinances on a primary residence have a three-business-day right of rescission before funding; other transactions may follow different timelines.

Learn more about Mortgage Closing and Funding.

Understanding the refinance process is only part of the equation. The next step is determining which specific loan program is right for you and your financial goals.

Whether you’re looking to lower your interest rate, reduce your monthly payment, or cash out some of your home’s equity, the team at Mortgage Mark is ready to review your options and help you make an informed decision.

EXPLORE TYPES OF MORTGAGE REFINANCE