How to Refinance Your Mortgage – a Step-by-Step Guide

by | Feb 2, 2022 | Uncategorized | 0 comments

If you’re a homeowner with a high-interest mortgage rate, you might benefit from refinancing your home loan to get a lower rate. With that said, refinancing does involve a lot of paperwork, credit report scrutiny, lender research, and more, which can overwhelm and prevent you from taking the necessary step. You can avoid the anxiety by learning about the mortgage refinancing process step by step. 

So, without ado, let’s explore how to refinance your mortgage!

Steps to Refinance Your Mortgage

Here are the steps you need to take to refinance your mortgage:

Check Your Credit Score

An essential step in the mortgage refinancing process is to check your credit score. You can order a credit report from a credit-reporting agency, such as Experian or Equifax. Moreover, you will need to access the free copy of your score from the Annual Credit Report website. If you have a score of 740 or higher, you will likely get the best refinancing rates. If your score is below 660, you will have to deal with a higher mortgage interest rate. But if your credit score is lower than 620, you might have to resort to a government refinancing program, including FHA refinancing options and VA Interest Rate Reduction Refinance Loan.

Improve Your Score

Study your credit report carefully to ensure that it doesn’t contain any false information. If you find something amiss, you can dispute it and get it cleaned up from your report before refinancing your home loan. You can also improve your score by paying off your credit cards in full each month. Moreover, don’t make any significant purchases before closing your loan. 

Get All Relevant Documents in Order

Before applying for a refinance, make sure to collect all your relevant documents in one place. Prospective lenders will be interested in seeing your credit score report, tax returns, pay stubs, W-2 tax, information returns, and more. This way, they will determine your propensity to pay your bills, loans, and taxes on time by studying your credit history and your ability to pay by measuring your income and assets. 

Determine the Loan You Want

Before refinancing your loan, you must determine what type of loan you want based on your distinct needs. After all, you have a variety of loan programs and terms from which to choose. For instance, if you’re going to pull cash from your equity, you might choose a cash-out refinance program. Alternatively, if you need a lower interest rate and monthly payments, you might benefit from a rate-and-term refinance. 

Compare Lenders for the Best Rates

The mortgage refinancing market is flooded with lenders, so you will have to make the right choice. You can start with your previous lender to see if they offer a better loan. You can also try different banks, non-bank lenders, and credit unions. You should never rush through this process and take your time to choose the lender who is offering a refinancing plan that works best for you. Ideally, you should check the rates of at least three lenders. Don’t forget to factor in the lenders’ closing costs before making your decision.  

To get estimated rates and loan offers, you will need to submit a preapproved loan application and relevant documents to each lender. You will have to submit the data mentioned above along with your contact information, personal ID, bank statements, and details about the property you’re planning to refinance. Then, you can compare their loan offers by calculating the Annual Percentage Rate for each loan. It will reflect your mortgage rate and the fees you will pay to obtain it. A higher APR means you will pay more over the loan’s lifetime. 

Look for Freebies

Some lenders might offer lender credits that go toward the cost of loan closing. These credits might increase your refinancing interest rate by a fraction. They depend on the loan-to-value ratio, which is the amount you borrow compared to the value of your property, the lender’s willingness to incentivize the deal, and the mortgage rate. 

Lock in a Stable Rate

Due to the fluctuating interest rates, it’s always best to lock in your interest rate after applying with the lender. Alternatively, you can lock it in during your loan process but before your closing. It’s because if your rate lock duration expires before your loan closes, you might have to extend it, which will result in additional fees. You might also be able to negotiate a float down, which essentially means that if the interest rate lowers within your rate lock period, you can get the lower rate instead of the one you locked. 

Close on Your New Loan 

The next step in the mortgage refinancing process involves your lender assessing your financial details so they can close the loan. They will verify the accuracy of all your documents and data to establish your creditworthiness. It’s known as underwriting, and it might take a few days to a few weeks. You might also have to deal with a professional appraiser who will appraise your home’s value. So, make sure to make minor updates and repairs before the appraiser comes knocking on your door.

Finally, the lender will approve your loan and move forward with its closing, which is when your loan will be finalized, and you will have to sign the paperwork. Your lender will provide you with a closing disclosure document some days before the official closing, giving you time to go over it before signing the deal. You will have to pay any closing costs that weren’t included in your loan amount on the closing day. 


Now that you know how to refinance your mortgage put your trust in Integrity Mortgage NMLS #1692497 to offer you the best refinancing loan for your property. Contact us today! 


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