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Mortgage Refinance Can Help with Financial Stress

Unpaid debt and a steady inflow of bills is enough to keep anyone up at night. If you feel like there’s no way out of your current financial situation, maybe it’s time to consider refinancing your mortgage. Done right with a reputable lender, mortgage refinancing can lower your monthly mortgage payment. And that might be enough to relieve some of the financial pressure you’ve been feeling.

Besides paying less each month towards your mortgage, when you refinance, the more advantageous mortgage terms you negotiate might help you pay off your mortgage sooner. The refinancing process is very similar to the process you went through when you obtained your original mortgage. With patience and these helpful tips, you’ll have a better chance of walking away with the best rates out there.

Check the rates from several refinancing specialists

Yes, that’s right. The mortgage refinancing industry is competitive, and it definitely makes sense to shop around for the best deal. It’s okay to complete the pre-approval application. In fact, it’s a good idea. But make sure to inform each refinancing lender that you are not yet authorizing that lender to obtain a copy of your credit report. Inquiries into your credit history can affect your credit score. If it goes lower as a result of multiple inquiries made during the refinancing process, you may end up having to settle for less than the best refinancing terms. It’s in your best interest to allow only the lenders that ultimately offer the most favorable terms and the lowest monthly payment to request a copy of your credit report.

Beware of prepayment penalties

The refinancing process involves paying off your current mortgage and replacing it with the newer, more advantageous mortgage. That’s why it is important to know whether your current mortgage includes a prepayment penalty. If it does, you also need to understand how the prepayment penalty is calculated. Prepayment penalties vary among lenders and can be costly, equivalent in some cases to several months of your current mortgage’s interest. If your mortgage has a prepayment penalty and you still intend to refinance, make sure you have set aside adequate funds to cover the cost of this penalty.

Know the true costs of refinancing

It’s not enough to be quoted a lower monthly payment. When considering mortgage refinancing, you need to know all of the closing costs that are involved, as well as the interest rate you’ll be paying. That’s the only way you’ll know for certain that you are getting a great deal. If you feel the costs and quoted rates are too high, say “No thanks” and find another refinancing specialist.

Have all mortgage refinancing terms put in writing

This cannot be stressed enough. Unless it’s in writing, what you are quoted is always subject to change. Always protect yourself by requiring the mortgage refinancing specialist to itemize and put in writing the interest rate and prepayment penalty, if applicable, and anything else that you will be required to pay as part of the refinancing process.