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The Ultimate Guide to Mortgage Refinancing

Whether your goal is to save money, tap home equity, eliminate private mortgage insurance or consolidate debts, a mortgage refinance could be a smart move.

Refinancing is a common process that involves obtaining a new mortgage loan and using the proceeds to pay off an existing mortgage. The primary goal is to lower your interest rate. But you may also want to change the terms of your loan, such as the length or repayment term.

When you refinance, you can often take advantage of lower interest rates that are available on the market. These rates can save you a significant amount of money over the life of your loan.

But you can only get lower mortgage rates by refinancing with the right lender. It’s important to find a lender that you can trust, one that can provide the service you expect and help you meet your goals.

There are many different types of mortgages and lenders, so you should do your research to find the best option for you. The most common mortgage types are fixed-rate loans and adjustable-rate mortgages (ARMs).

Fixed-rate refinancing: This type of loan provides you with a set interest rate for the entire length of the loan, usually 30 or 15 years. A popular choice for homeowners, it can be a great way to build equity in your home and lock in a low rate for the long term.

Adjustable-rate refinancing: ARMs offer a lower initial interest rate, but the rate can adjust over time based on a market index. Some borrowers opt for this type of loan because they like the flexibility it offers, but others prefer a fixed-rate mortgage because of the peace of mind it provides.

Getting a mortgage is easy but finding the best rate can be a lot more complicated. That’s why it’s a good idea to use online tools to make your shopping experience quicker and easier.

The online tool Credible lets you compare refinance rates for free and in minutes. It walks you through the process from start to finish. It’s also a good resource to check customer service and reviews of the company you plan to work with.

It’s a good idea to shop around for lenders that have good reputations, as well. Look for Better Business Bureau ratings and search the Consumer Financial Protection Bureau’s Consumer Complaint Database to see if there have been any recent complaints against the company you’re considering.

When you apply for a refinance, you’ll need to have a lot of information on hand. Your credit score, current income and liquid assets are all important factors that your lender will use to decide whether you’re a good candidate for the mortgage.

Your debt-to-income ratio will also play a role in your mortgage refinancing decisions. To ensure that you can afford the monthly payments on your new loan, you’ll need to demonstrate that your debts are low enough that you’ll have money left over each month for essential expenses and a little extra for savings.

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