Refinance Your Home Mortgage Loan

A home mortgage refinance loan is a loan that replaces the existing mortgage on a home. The most common purposes behind refinancing a mortgage include lowering the interest rate of an existing loan, to pay off debt, to take a vacation or to make home improvements. In todays down trending economy, the requirements and standards for a home mortgage refinance loan are easier than before.

Equity is a must for a home mortgage refinance loan

In order to acquire a home mortgage refinance loan, a borrower must have enough equity in their home. An appraisal will be performed to determine the dollar amount of the new mortgage that can be borrowed. Since the bank will only borrow from 85-95% of the home's value for a refinance loan, the appraisal amount must show that there is substantial equity in the home. This is bad news for those home owners who owe exactly what their house is worth. Or, in some cases, owe more on the house than what it's worth.

Poor Credit OK for mortgage refinancing

Conventional lenders will still rely on a solid credit history when deciding on a loan approval. However, the FHA (Federal Housing Administration) has made home mortgage refinance loan standards easier. Home owners can be approved for an FHA home refinance with a credit score as low as 580. Also, a bankruptcy older than 2 years and a foreclosure older than 3 years does not disqualify a borrower from being accepted according to FHA standards.

Check the mortgage rates

Before going to any lender for a home mortgage refinance loan, get informed about current mortgage rates. Also, be sure that the current rates offered are lower than the established mortgage rate on the home. After all, a higher interest rate on a home mortgage refinance loan will increase the monthly payment instead of lowering it.

Shop banks for a home mortgage refinance loan

Getting competitive quotes from several banks is in the best interest of the borrower. Banks want business from home owners. Therefore, certain fees can often be lowered for a home mortgage refinance loan when a bank knows the borrower is shopping around. One place to begin your research is mortgage refinance offers.

Expect closing costs on a home mortgage refinance loan

Just like purchasing a new home, a home mortgage refinance loan has closing costs. There is an option to pay points and then lock in a percentage rate for the home mortgage refinance loan. In addition, to be paid is an application fee along with all the other processes of closing a home loan. Keep in mind that the closing costs will take a good amount of cash. Therefore, the more equity in the home, the more beneficial a home mortgage refinance loan will be.

Check today's rates to determine if a home mortgage refinance loan is right for you.