There are a few steps that need to be completed in order to refinance a home. First, the homeowners have to qualify for a new mortgage based on the requirements of the lender. The home also needs to be appraised before the refinance is approved.Continue Reading
The process of approving a refinance application is similar to the process for obtaining the original mortgage. The borrower must meet specific income and credit requirements, and debts and assets may be examined. If the home is determined to be worth less than the borrower is asking for during the appraisal, or if the loan to value ratio is outside of the lender's guidelines, the refinancing application may not be approved.
There are a number of reasons why consumers may look towards refinancing their home. One common reason is to obtain a lower interest rate, which could lower the borrower's monthly payment and the amount of interest paid over the life of the mortgage. Some borrowers refinance to obtain a shorter loan term, which assists in paying off the home faster. Borrowers can also refinance if they have equity in their homes that they want to cash out to complete remodels or repairs to the property.Learn more about Credit & Lending