Refinancing FAQs

Below are common questions borrowers ask about refinancing. This information is provided for educational purposes and may vary based on individual qualifications, loan program guidelines, and market conditions.

1. What is refinancing?

Refinancing is the process of replacing your current mortgage with a new one. The new loan may have a different interest rate, loan term, or loan structure, depending on your goals and qualifications.

2. Why should I consider refinancing?

Some common reasons borrowers consider refinancing include:

• Potentially lowering a monthly payment by obtaining a lower interest rate, depending on market conditions and qualifications.
• Changing the loan term (for example, switching from a 30-year loan to a 15-year loan, or extending the term).
• Switching between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage, or vice versa.
• Accessing available home equity through a cash-out refinance for purposes such as home improvements or debt consolidation.
• Restructuring a loan in connection with life changes such as divorce or estate planning (note: title changes are handled separately through escrow or legal documentation).

3. What costs are associated with refinancing?

Refinancing typically involves closing costs, which may include:

• Loan origination fees
• Appraisal fees
• Title insurance
• Escrow and settlement fees

Closing costs vary based on loan type, property, and individual circumstances. Please contact us to obtain an estimated breakdown and to evaluate whether refinancing makes sense based on your situation.

4. How do I know if refinancing is right for me?

Refinancing may be worth considering if:

• Current market interest rates are lower than your existing rate.
• You plan to keep the property long enough to recover the closing costs.
• You want to adjust your loan structure to better align with your financial goals.

5. What documents are needed to refinance?

• Salaried borrowers: two recent pay stubs and two most recent W-2s
• Self-employed borrowers: two most recent personal and business tax returns
• Two most recent bank statements
• Proof of homeowner’s insurance
• A copy of your current mortgage statement

Additional documentation may be required depending on the loan program and underwriting guidelines.

6. How does a cash-out refinance work?

A cash-out refinance allows you to replace your existing mortgage with a new loan that is larger than your current balance. The difference between the new loan amount and the existing payoff is provided to you as cash at closing.

7. How long does the refinancing process take?

The refinancing process typically takes 30 to 45 days from application to closing. Timelines may vary based on loan type, lender requirements, appraisal turnaround times, and how quickly documentation is provided.

8. Will refinancing affect my credit score?

Refinancing may result in a temporary credit score decrease due to a credit inquiry and the payoff of the existing loan. Over time, making on-time payments on the new loan may help your credit profile stabilize.

9. Can I refinance to remove private mortgage insurance (PMI)?

In some cases, refinancing may allow you to remove PMI if sufficient equity is documented, subject to loan program guidelines and appraisal requirements.

10. Do I have to start over with a 30-year term?

No. Refinancing allows you to choose different loan terms, including shorter options. Shorter terms may reduce interest paid over time but can result in higher monthly payments.

11. Is it possible to refinance with less-than-perfect credit?

Refinancing with lower credit scores may be possible, though it can involve higher rates or limited program options, depending on the loan program.

12. Are there refinancing options for investment properties?

Yes. Investment property refinances are available, though they typically have stricter underwriting requirements and different pricing considerations.

This content is for informational purposes only and is not a commitment to lend, an offer to extend credit, or a guarantee of loan approval or terms. Programs, rates, and availability are subject to change and depend on individual qualifications and market conditions.