Get the Loan That Fits Your Life
Whether you’re looking to lower your monthly payment or shorten your loan term, refinancing with Premier can help.
Refinancing your mortgage loan has serious financial benefits, from lowering your monthly payment to decreasing the interest you pay – both now and over the life of your loan.
Is refinancing on your radar? Just follow these steps for success.
Step 1: Determine if it’s the right time to refinance.
If mortgage prices are falling or your home has appreciated in market value, refinancing may be a good financial choice for your household. Generally speaking, one or more of the following conditions need to be present before you should consider refinancing your mortgage:
- Mortgage interest rates have fallen below your current loan’s rates
- Your home has significantly appreciated in market value
- You’ve been making payments on your original 30-year mortgage for less than 10 years
In a falling mortgage interest rate environment, refinancing can help you lower your monthly payment or shorten the term of your loan. If your home has experienced a dramatic increase in market value, it can help you take advantage of the increased equity in your home, giving you extra funds to pay off debts or put toward savings.
Refinancing usually makes the most sense in the early years of your mortgage, when payments are primarily going toward interest. As you begin to pay more principal than interest, you may be better off keeping your original loan. Remember, refinancing will give you a brand new mortgage to pay off, taking you back to the beginning of the cycle in which you are paying mostly interest.
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Step 2: Assessing your cash flow needs.
When refinancing your mortgage, you may have the opportunity to take cash out of your home’s equity. To receive a one-time cash payment during the refinancing process, you’ll need to get a loan for more than you owe on your principal mortgage balance. Remember that with a cash-out refinance, you are also increasing your overall level of mortgage debt. Cash-out refinancing is often used to consolidate high-interest, nondeductible debt.
You could also use cash-out refinancing for nonrecurring expenses, such as purchasing a car, paying for a wedding, or financing an education – items that might otherwise require you to borrow funds at a higher nondeductible interest rate. This, in turn, would reduce your overall monthly payments because:
- Your mortgage interest rate is likely to be lower than credit card rates or other types of bank loans.
- Your mortgage interest may be tax deductible, while your credit card interest is not.
If your home is an important part of your total net worth, consider all your options carefully before taking cash out of its equity. Consolidating debt and taking on new consumer debt will simply increase your overall liabilities while potentially giving you a false sense of financial security. If you are considering a cash-out refinance to pay educational expenses, you can take advantage of state and federal education loan programs that also offer tax-deductible interest.
Step 3: Get organized.
To make your refinance as efficient as possible, it’s important to get organized before beginning the process. First, review your credit report. It’s a good idea to understand your credit score and review your credit history at the beginning of the process so you know what to expect regarding rates and eligibility. Remember: Even if you have less than perfect credit, you may still qualify for a mortgage.
Next, gather your financial records and account statements. See our loan checklist for a full breakdown of the documentation we’ll need.
Finally, consider and compare your loan options. Which suits your financial goals best? Talk to a loan officer if you’re unsure.
Step 4: Contact us.
Before refinancing your mortgage, get in touch with one of our expert loan officers. They can provide you with valuable advice about the refinancing process and help you consider all of your options. Your loan officer can help you find the perfect loan to fit your needs, explain mortgage rates and discount points, and help you go over all of your financing options.
Step 5: Start the journey to closing.
The closing process typically takes a few weeks. Your loan officer will give you a reasonable estimate of how long it will take to complete the entire refinance.
The first step will be to lock in your interest rate. You’ll select your loan product and solidify the interest rate you’ll pay on it. This will protect you from interest rate increases that may occur during the refinancing process.
Next, your loan officer will review your information and request any additional documentation that may be required. They’ll place an order for a property appraisal, survey of the property’s boundaries, flood determination, title search, and title insurance. Then the underwriter will review all of your information and grant a final approval on your loan.
Finally, the closing agent will assemble the closing package and ensure that all fees and other closing payments are accurately documented. In most cases, the closing agent will establish an escrow account to help you pay necessary insurance and real estate taxes.
Typically, either your closing agent or your loan officer will contact you to schedule a date and time for the closing. As the final step, your closing agent will disburse the funds and your refinance is complete.