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Mortgage refinance process

Published On: September 2nd, 2022

If you have a mortgage with a high interest rate compared to today’s mortgage rates, you might be thinking of refinancing your loan. This is one of the best reasons to refinance. This page goes over the process of refinancing and everything you need to know to get started.

Refinancing a mortgage involves taking out a new loan, typically with better terms, to pay off an existing loan. This process allows homeowners access to their home equity to lower their monthly payments, get access to quick cash or make home improvements.

Refinancing at a lower rate might save you money each month,* providing extra cash for other expenses or putting more towards savings. In some cases, refinancing could save you hundreds or thousands of dollars in interest payments over the life of your loan. Use our refinance calculator to help crunch the numbers for your specific situation.

Whether you’ve been paying your mortgage for a decade or just a few years, your circumstances, lifestyle, income or priorities might have changed. An annual budget evaluation should include a quick review of your mortgage to see if a refinance makes sense.

There are many ways a refinance can help you achieve your financial goals.

What are the steps in the refinance process?

A refinance involves taking out a new loan, so the process begins with an application.

You’ll need to gather some of the same documents that you provided during your first mortgage loan, like proof of income and documentation of all debts. After you submit your application, your loan officer will review your credit history, information about your debts and income and the details of the previous loan.

We’ll usually order an appraisal to verify the value and equity of the property. Your new mortgage may include many of the same fees as your initial purchase mortgage, like the appraisal fee and other loan closing costs.

Here’s a snapshot of all the steps included in the refinance process so you know what to expect.

  • Application Your lender will ask for many of the same documents you provided when you purchased your home. After you’ve received your loan estimate, you’ll need to provide recent pay stubs, W-2s, recent bank and credit card statements so we can approve your loan.
  • Interest rate lock After your application is approved, you can commit to the interest rate to lock it in. Rate locks usually last for 15-60 days.
  • Processing The processor reviews and packages your loan file to submit to an underwriter for approval.
  • Underwriting An underwriter will review your loan and make sure everything is correct.
  • Appraisal A home appraisal is required to verify the value of your home when you refinance, just like when you first purchased your home. The appraiser will provide a report with the estimated value to you and your lender. If the appraised value is equal or higher than the amount you’re trying to refinance, the loan moves forward. If the appraisal comes in low, you have the option to decrease the amount or wait to refinance sometime later.
  • Loan closing The final step is the loan close. This happens after the underwriting process and appraisal are complete. You’ll go over a large stack of loan paperwork with the title agent and sign your documents. Then it’s time to celebrate!

How long does the refinance process take?

Because a refinance replaces your current loan, the timeframe can vary depending on a few factors including the details of your financial situation, third party involvement and how quickly you collaborate with your lender.

You can get a sense of what you’ll qualify for by using our refinance calculator.  We’re here to help you through that part of the process. You can also speed things up by preparing important documents ahead of time and touching up your home before the appraisal.

Even if your current home loan payments are affordable, there are many reasons to review if a refinance is right for you. Whether you need cash to pay essential expenses or would like to reduce your monthly payments, your decision should be based on what’s best for your financial situation. We’re ready to help you figure out whether refinancing a home is the right move for you. Our local loan officers can work with you directly to make sure you get the best possible rate. Contact us today!

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction. *By refinancing an existing loan, total finance charges may be higher over the life of the loan. *Information is for general illustrative purposes only. The information is believed to be reliable, but Guild Mortgage does not warrant its completeness, timeliness or accuracy. Guild Mortgage assumes no responsibility for errors or omissions in the information provided. *Typically, a non-purchase second mortgage. **Please consult your financial advisor on the consolidation of short term debt into long term debt.

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