Understanding the Refinance Process

The refinancing process begins when you, the homeowner decides to consider the possibility that you want to refinance your home now. Perhaps the interest rate is fluctuating, driving up the price of your monthly payments, or the amount you have to pay is simply too high on a fixed rate because you changed jobs or other factors in your life. Whatever the reason, once you've decided to look into refinancing your mortgage, the process has begun. To see it through a successful conclusion, you should be as aware and educated as possible on the subject and what to expect.

Type of Mortgage to Refinance Into:

The next step in the process is to figure out what type of mortgage you want to apply for to replace your current one. With some lenders offering more than a dozen choices, this is not a decision to be approached lightly or without knowledge. Some of the more common types of mortgage refinances and their reasons are:

• Fixed Rate Conventional: Refinancing into this mortgage type ensures that you will have a single interest rate on your loan for as long as you are paying on it. These loans can be set at varying terms ranging from 10 to 60 years long and the primary purpose for refinancing into one is to get out of a less favorable adjustable rate mortgage when the rate has adjusted so high you are difficulty making your monthly payments.
• Adjustable Rate: The adjustable rate mortgage refinance is usually handled by skilled investors or for a property you do not intend to live in as your primary residence. This is because adjustable rate mortgages start with a very low interest rate that can begin to fluctuate after an introductory period of 2-5 years. Choosing to refinance into an ARM is usually meant as a short-term solution if you are in need of the cash savings on your monthly mortgage but do not want to take equity out of the property.
• Reverse Mortgage: A Reverse mortgage is usually taken out by an older homeowner who has completely paid off (or nearly so) their entire mortgage and wishes to start receiving payments from their equity over time.

The Mortgage Application

There was a time when choosing to refinance meant that you had to drive around town trying to find a lender with the best value and mortgage options for you. Along came the Internet, and the choice to refinance your mortgage now became easier as lenders began putting their applications online. Now instead of driving around, all you had to do was surf from website to website filling out applications. Then SaveMoneyRefinanceNow.com came along and took away even that step. You can apply and receive mortgage quotes instantly through this site for free.

Escrow & Closing

After the decision as to whether or not you should refinance and choosing your new type of mortgage and applying for it, you will have to go through a process that should be somewhat familiar to you: escrow. Escrow is the process of approving all transactions, paperwork, legal hurdles, and verifying the status of both borrower and lender while a considerable sum of money is being held by a third party, (in this case the money to pay off your current mortgage being offered up by the new lender).