Mortgage Refinance 101

The Basics of Mortgage Refinance - It is a common misconception for homebuyers to believe they don't qualify for or think that mortgage refinancing is a complicated process.  Here are basic information a homebuyer should know about Mortgage Refinance:

What is a refinance?

A mortgage refinance is when a borrower asks for a new mortgage with a new interest rate and new term to either pay off and replace their existing mortgage. It is commonly mistaken as a modification of a loan when in fact, it is a brand new loan.

 What are the benefits of refinancing?

A refinance is done to get a lower monthly payment, to make a change in the length or terms, or to get cash out at closing. For example, borrowers with existing mortgage with a higher rate when the interest rates are currently low, they tend to get a refinance so they can pay lower monthly mortgage fees. Or some want to refinance from a 30-year fixed-rate mortgage into a 15-year fixed-rate mortgage.

Are there qualifications I have to meet?

Just like any applications, yes. But contrary to the belief that it is a more complex procedure, the qualification is similar to your existing mortgage. The lender will look into your credit score, payment history, debt-to-income ratio, employment and income, assets, and cash available. Others may even have less stricter qualifications depending on the type of loan.

What will I need to do?

Chances are it is a very straightforward procedure if you use the same lender you have your existing mortgage with. The experts will find the right mortgage for you, ask for financial proofs and paperwork, review your qualification and then go to closing. Because of technology, some lenders may not even ask you to visit their physical office.

For more tips on buying a home and finding the right lender, please call Lora Reynolds, Broker/Owner of Indy Homes Realty Group, LLC at 317-496-6291 or visit her website at www.lora.indyhomesforyou.com and start your house hunting. Good Luck!