Mortgage Refinancing Process

The Reichert Mortgage Team

The mortgage refinancing process can feel overwhelming. After weighing different lenders and loan options, you have to apply for and close on a whole new mortgage.

As a Colorado-based mortgage broker, the Reichert Mortgage Team is here to simplify the process. We work with the best lenders nationwide to ensure you get the lowest refinancing rate. We’ll also walk you through the process step-by-step, so you can feel confident about your decision to refinance your home.

Steps to Refinance a Home

There are six basic steps to refinancing a home, but before you start shopping for rates or applying for a new loan, make sure you understand why you want to refinance. For example, are you trying to consolidate debt, pay off your mortgage early, or lower your monthly payment? The type of loan you need will vary depending on your financial goals.

Step 1 - Compare Rates from Several Lenders

When shopping for a mortgage or refinance loan, you can meet with the lenders directly and perform your own comparison. However, this can get tricky, especially if you don’t have a firm understanding of mortgage terminology.

We recommend working with a reputable mortgage broker, like the Reichert Mortgage Team, instead. Since we don’t work for any specific lender, our only priority is helping you find the best loan option for your situation. We explain the difference in rates and loan terms in easy-to-understand language.

Step 2 - Apply for Your Loan

This process will be very similar to applying for your initial mortgage loan. You’ll need to submit proof of income and other financial documents to your lender so they can determine if you are eligible for the loan. Expect to submit:

Check with your lender or mortgage broker for a full list of required documents to avoid delays in the loan process.

Step 3 - Float or Lock in Your Interest Rate

Once approved for your loan, you can either lock in or float your interest rate. Locking in your interest rate gives you a short period to close without being affected by market fluctuations. If you float your rate, you could have a lower interest rate if rates drop between when you were approved for the loan and closing. However, you also risk rates going up.

Step 4 - Home Appraisal

Your new lender will order a home appraisal to ensure that your home’s value is equal to or greater than the requested loan amount. If it is less than the requested loan, you’ll either need to cancel your application or accept a smaller loan. Completing minor repairs and cleaning your home before the appraisal can help improve your score.

Step 5 - Underwriting

The underwriting process is when your lender verifies all of your financial information and issues the final approval for the loan. They will look carefully at the documents you provided with your loan application, evaluating credit score, debt-to-income ratio, income history, and more. This process can take up to a few weeks. Having your documents in order and responding promptly to requests for more information can help expedite the process.

Step 6 - Closing

If the appraisal and underwriting process goes smoothly, you’re ready to close on your loan. You’ll sign the final documents and pay any closing costs. Once you close, you still have a 3-day grace period to back out of your loan before it’s locked in.

Mortgage Refinance Calculator

Wondering if refinancing is the right choice for you? Check out our free mortgage refinancing calculator. You’ll need to know your remaining mortgage balance, the interest rate on your loan, the new interest rate, and what you’d like the refinanced loan term to be.

Our calculator will show you a new estimated monthly payment and how much you could save over the life of the loan. For the most accurate estimate, however, contact one of our mortgage experts.

Mortgage Refinancing FAQs

How much does it cost to refinance my mortgage?

You should expect to pay between 2-6% of the loan amount in closing costs. Common closing costs include your application fee, credit check, title search, and the appraisal fee. You can usually opt to roll the closing costs into your monthly mortgage payment.

How long does it take to refinance my mortgage?

Refinancing can typically be completed in 30-45 days, but it will depend on how quickly the appraisal and underwriting process is completed and if there are any issues.

When is it worth it to refinance?

A general rule of thumb is that if rates drop 1-2%, refinancing will probably be worth it. You’ll want to calculate how much you’ll save monthly and how long it will take for you to recoup closing costs. Our mortgage experts can help you determine if refinancing makes sense for you.

Does a mortgage refinance affect credit score?

Yes, you will probably see a temporary decline in your credit score when you apply to refinance your home. This dip is caused by the lender performing a hard inquiry into your credit report. Closing your long-standing home loan can also cause a slight decline.

Does refinancing require a down payment?

No, there is no down payment on a refinance. The main costs associated with refinancing are your closing costs.

What documents will I need to apply for a mortgage?

Due to federal interest rate hikes, mortgage rates have been increasing rapidly over the last year. Before that, however, rates were at an all-time low. Many believe that rates have peaked at the beginning of 2023, so it’s possible that we’ll start seeing more favorable refinancing rates very soon.

Explore Mortgage Refinancing Rates

Contact us today if you think refinancing is right for you. Our friendly mortgage experts will help you understand your current financial situation and what refinancing options might work for you. Refinancing can be a great way to lower your monthly payment or use your home’s equity to make much-needed improvements. No matter what your reason is for refinancing, the Reichert Mortgage Team is here to help.