How To Refinance Your Mortgage Loan

How To Refinance Your Mortgage Loan

In simple terms, refinancing your home mortgage means paying off your current loan by taking out another loan. Most people decide to refinance if they feel they can get a better rate then what they are currently paying, thus reducing their monthly payments. Another reason to do a home mortgage refinance is to change the terms of your current agreement or to get away from binding restrictions in that loan.

For example, you may currently have an adjustable rate mortgage but wish to change it to a 30 yr fixed mortgage. Refinancing would allow you to do this if the proper conditions exist. In order to find out if you are eligible to refinance or if it is beneficial, meet with a lender or bank. You may meet with the current owner of your loan or shop around for another lender or bank.

There may be several loans available to you or you may find you are quite restricted in your choices. It will often depend on an appraisal, your current finances, and your credit score. A lender will examine all of these areas and meet back with you to advise you on exactly what you are eligible for. Usually the higher an appraisal, the better your credit score, and a stable flow of income will allow you to get the best rate possible and the type of loan you want.

The biggest difference from when you originally took out the loan to now is that you may not have to bring a down payment to the table at closing. This may vary, however, depending on market conditions. The fees for transferring the loan and completing it, also called your closing fee, will need to be paid for but a lender usually is able to absorb the cost of that into the loan.


Lisa Roduner
DISCLAIMER: Neither Indiana USDA Mortgages ( nor Luminate Home Loans is affiliated with any government agencies, including the USDA.