Refinancing: The Steps from Start to Finish
Refinancing may seem confusing. Understanding
how it works will make you feel more confident
about the process. In simple terms, refinancing replaces your current mortgage loan with a new
one. Homeowners typically refinance to reduce their monthly payments, to switch to a fixed-rate mortgage, or to cash out equity in their home.
Here are the basic steps:
- Start by considering if a refinance could benefit you. If mortgage rates are 5/8 percent or more lower than your current rate, you could be a good candidate.
- Refinancing includes closing costs, so do some costs analysis. Evaluate the reasons why you want to refinance. Also determine how many years you plan to stay in your home. The longer you stay in your home, the more time you have to recoup expenses.
- Contact your BB&T mortgage professional. Similarly to when you originally applied for your loan, your mortgage professional will review your income, assets and credit situation―along with your reason for refinancing―to determine if a refinance is right for you.
- BB&T Home Mortgage will also measure the equity you currently have in your home. To calculate equity, we subtract your current loan balance from the current home appraisal amount.
- If you have enough equity for a refinance (at least 20%), you generally qualify. If you have less, refinancing may not be an option.
- If you qualify, you may apply online or meet with your BB&T mortgage professional who will walk you through the mortgage rates and loan terms available to you and help you make the most appropriate selection.
- Be sure to consider closing costs when you are evaluating future savings offered by a refinance. For your convenience, you can roll your closing costs into your new mortgage, so you do not incur out-of-pocket expenses.
- The closing process for a refinance is similar to what you experienced when you bought your home. This time, only you and your mortgage professional will be present. There will be lots of paperwork to sign, but when it's over you will be one step closer to your financial goals.