Refinancing is great once a house owner gets to a place where they want a brand new real estate loan to replace their current loan to save money or remodel. Most people finance to lower their cash out of pocket and cut back their mortgage payments, usually saving thousands in mortgage interest. However, that’s not the sole reason to refinance a mortgage. You will have to finance into a brand new loan and brand new loan terms — which may assist you paying off your house early. Otherwise you may refinance to take advantage of available home equity.

How will refinancing work?

Refinancing involves taking out a bran new loan to replace your existing loan. When you choose to refinance, you submit an application for a new home loan similar to when you bought the home originally. However this time, instead of using the loan finances to purchase the home, you use it to pay off your current mortgage. Refinancing, in essence, eliminates the debt owed on your current mortgage. It also lets you select the rate and loan terms on your new loan, so you can get a new loan that saves you cash or helps you complete other financial goals you may have. You continue to pay off your house — but now you’re making your payments on a new loan versus an old one. Please realize you don’t actually pay off the first mortgage on your own. The mortgage lender will handle this part on their end. As far as you’re concerned, the mortgage refinance process will look a lot like your original home loan process had.

How long does it take to refinance

The refinancing process is exactly like the process you went through with your original mortgage. There's an application, you will submit documentation, go through underwriting, and finally, close on your new mortgage. The length of this process depends on the lender you choose and the overall real estate market demand. A lender dealing with lots of applications or a sudden rush in clients may take longer to process your loan than one with less mortgages to process.

Home loan refinancing

Why most people refinance is to get a lower interest rate. Let's just say you bought your home 2 years ago. The homes cost was $300,000. You put a $30,000 down payment on the home and took out a loan for