Refinancing a mortgage means that you are applying for a new loan. When you do so, you pay off the old loan in the process. Because this is a new loan and has new terms, you may need to provide important information and documents to make sure that you’re eligible for a refinance. Most people applying for a refinance have to provide the following information:
Credit score and credit payment history.
Income and employment history.
Value of assets such as stocks, retirement, and savings funds.
Your home’s current value.
Why should I refinance?
Most people refinance in order to get a lower mortgage rate. Currently, the average mortgage rate is at a historic low, so even if you have low equity, you may still be eligible for a refinance that can substantially lower your mortgage.
What is an FHA streamline refinance?
This is a streamline refinance into a new FHA loan with a lower interest rate and no appraisal is required. There is no verification of income, job history, or credit reports. Although you may not increase the loan balance to cover closing costs.
What do I need to know before I refinance?
There are two important questions that you should be asking as you consider a refinance:
If there is one, what is the prepayment penalty on my current mortgage?
How much will my new mortgage cost?
Many homeowners use smart refinancing to keep their homes and save money. However, make sure you’ve done your homework and know exactly how a new loan will impact your finances.