How do I Refinance a Home?

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  • Written By: Autumn Rivers
  • Edited By: Andrew Jones
  • Last Modified Date: 08 February 2020
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Refinancing your home may save you money over time, but since it will cost you some money upfront, it is important to do meticulous research before you get started. You should shop around and get quotes from lenders before you commit to one to refinance a home. You should also be aware of refinance programs that help out borrowers who meet certain requirements. Finally, make sure that the amount you will save is worth the upfront costs that you will pay.

Most people compare prices at several locations before buying a car, a home, and even everyday necessities. It is important to do the same when trying to refinance a home, as lenders all have different costs for this service. You should get at least three quotes before committing to a lender, and request a good faith estimate, which is a breakdown of all the costs that relate to the loan. Remember that lenders are essentially salespeople, and will likely do everything within reason to meet your refinancing needs so that you use them to refinance a home. Therefore, it is okay to negotiate with them, asking them to bring down costs and rates when possible if you agree to use them.


Before you commit to a lender, you should find out if there are any refinance programs available to you. This kind of program is usually aimed at borrowers with special circumstances. For example, in order to refinance a home, the property must typically have some equity, but, for example, there are programs in place that help homeowners whose homes are worth less than what they owe. Check the requirements of such programs, such as the necessary amount of equity and required credit score, to find out if you qualify.

Since there are fees to refinance a home, you should make sure that you will save money over the life of the loan before you decide to take this path. The rule of thumb is to only refinance when you can get an interest rate of two percentage points lower than your current rate. You should also examine how long it will take you to break even after paying the refinancing fees. You can do this by dividing your closing costs by the amount you will save monthly with the new rate. As long as the resulting number is smaller than the number of months you plan to stay in your home, the refinance makes financial sense.



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