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Home Refinance Loans without the Hassle!

Need refinancing options on a home, or other real estate? Choosing a refinance product that matches your goals and making sure you get the best rate for your given scenario can feel like playing whack-a-mole.

We’re here to make the home refinance process a whole lot easier, with tools and expertise that will help guide you along the way, starting with a free Refinance Analysis.

We’ll help you clearly see differences between loan programs, allowing you to choose the right one for you whether this is your first refinance or 7th.

Cash Out Refinance

We not only provide information on rates and important refinance details for different lender options to compare, but we can also show you how much you could get from your home with a cash-out refinance, what your monthly payment could look like as well as a mortgage type recommendations based on your financial priorities.

Cash-out refinance gives you a lump sum when you close your refinance loan. The loan proceeds are first used to pay off your existing mortgage(s), including closing costs and any prepaid items (for example real estate taxes or homeowners insurance); any remaining funds are paid to you.

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Differences Between Home Equity Loans Vs. Refinances

Cash-out refinances are first loans, while home equity loans are second loans. Cash-out refinances pay off your existing mortgage and give you a new one. On the other hand, a home equity loan is a separate loan from your mortgage and adds a second payment.
Cash-out refinances have better interest rates. Since cash-out refinances are first loans (meaning they'll be paid first in the case of a foreclosure, bankruptcy or judgment), they typically have lower interest rates.

Mortgage Refinancing: What Is It And How Does It Work?

Your home is an investment. Refinancing is one way you can use your home to leverage that investment. There are several reasons you may want to refinance, including getting cash from your home, lowering your payment and shortening your loan term. Let's look at how refinancing a mortgage works so you know what to expect.

What Does It Mean To Refinance A House?

Refinancing the mortgage on your house means you're essentially trading in your current mortgage for a newer one - often with a new principal and a different interest rate. Your lender then uses the newer mortgage to pay off the old one, so you're left with just one loan and one monthly payment.

There are a few reasons people refinance their homes. You can use a cash-out refinance to make use of your home's equity or look into a rate and term refinance to get a better interest rate and/or lower monthly payment. A refinance could also be used to remove another person from the mortgage, which often happens in the case of divorce. You can also add someone to the mortgage.

How Does Refinancing A Home Work?

The refinancing process is often less complicated than the home buying process, although it includes many of the same steps. It can be hard to predict how long your refinance will take, but the typical timeline is 30 - 45 days. Let’s take a closer look at the refinance process:

Applying

The first step of this process is to review the types of refinance to find the option that works best for you.

When you apply to refinance, we ask for the same information you gave when you bought the home. The underwriter will look at your income, assets, debt and credit score to determine whether you meet the requirements to refinance and can pay back the loan. Some of the documents we might need include:

Two most recent pay stubs
Two most recent W-2s
Two most recent bank statements

We may also need your spouse's documents (regardless of whether your spouse is on the loan). You might be asked for more income documentation if you're self-employed. It's also a good idea to have your tax returns handy for the last couple of years.

Locking In Your Interest Rate

After you get approved, you may be given the option to either lock your interest rate - so it doesn't change before the loan closes - or to float your rate.

Lock Your Refinance Rate

The rate lock period depends on a few factors like your location, loan type and lender.

Float Your Rate

You might also be given the option to float your rate, which means not locking it before proceeding with the loan. This feature may allow you to get a lower rate, but it also puts you at risk of getting a higher mortgage rate.

In some cases, you might be able to get the best of both worlds with a float-down option, but if you're happy with rates at the time you're applying, it's generally a good idea to go ahead and lock your rate.

Underwriting

Once you submit your refinance loan application, our lender begins the underwriting process. During underwriting, the mortgage lender verifies your financial information and makes sure that everything you've submitted is accurate.

The lender will verify the details of the property, like when you bought your home. This step includes an appraisal to determine the home's value. The refinance appraisal is a crucial part of the process because it determines what options are available to you.

If you're refinancing to take cash out, for example, then the value of your home determines how much money you can get. If you're trying to lower your mortgage payment, the value could impact whether you have enough home equity to get rid of private mortgage insurance (PMI) or be eligible for a certain loan option.

Home Appraisal

Just like when you bought your home, you must get an appraisal before you refinance. The lender orders the appraisal, the appraiser visits your property, and you receive an estimate of your home's value.

To prepare for the appraisal, you'll want to make sure your home looks its best. Tidy up and complete any minor repairs to leave a good impression. It's also a good idea to put together a list of upgrades you've made to the home since you've owned it.

How you'll proceed after the appraisal depends on whether:

The appraisal matches the loan amount. If the home's value is equal to or higher than the loan amount you want to refinance, it means that the underwriting is complete. Your lender will contact you with details of your closing.
The appraisal comes back low. If you get a low appraisal, the loan-to-value ratio (LTV) on your refinance could be too high to meet your lender's requirements. At this time, you can choose to decrease the amount of money you want to get through the refinance, or you can cancel your application. Alternatively, you can do what's called a cash-in refinance and bring cash to the table in order to get the terms under your current deal.

Closing On Your New Loan

Once underwriting and the home appraisal are complete, it's time to close your loan. A few days before closing, the lender will send you a document called a Closing Disclosure. That's where you'll see all the final numbers for your loan.

The closing for a refinance is faster than the closing for a home purchase.

At closing, you'll go over the details of the loan and sign your loan documents. This is when you'll pay any closing costs that aren't rolled into your loan. If your lender owes you money (for example, if you're doing a cash-out refinance), you'll receive the funds after closing.

4 Reasons To Refinance Your Mortgage

There are a variety of reasons why you might want to refinance your existing mortgage. Let's look at some of the main reasons here.

1. Change Your Loan Term

Many people refinance to a shorter term to save on interest. For example, say you started with a 30-year loan but can now afford a higher mortgage payment. You might refinance to a 15-year term to get a better interest rate and pay less interest overall. You can also refinance to a longer term to lower your monthly payment.

2. Lower Your Interest Rate

Interest rates are always changing. If rates are better now than when you got your loan, refinancing might make sense for you. Lowering your interest rate can lower your monthly payment. You'll likely pay less total interest over the life of your loan as well.

3. Change Your Loan Type

A different type of loan or loan program may benefit you for a number of reasons. Perhaps you originally got an adjustable-rate mortgage (ARM) to save on interest, but you'd like to refinance your ARM to a fixed-rate mortgage while rates are low. Maybe you finally have enough home equity to refinance your Federal Housing Administration (FHA) loan to a conventional loan and stop paying a mortgage insurance premium (MIP).

4. Cash Out Your Equity

With a cash-out refinance, you borrow more than you owe on your home and pocket the difference as cash. If your home's value has increased, you may have enough equity to take cash out for home improvement, debt consolidation or other expenses. Using cash from your home allows you to borrow money at a much lower interest rate than other loan types.

The Bottom Line: A Mortgage Refinance Can Make Your Home Work For You

When the time is right, refinancing is a great way to use your home as a financial tool. You can adjust your loan term, get a better interest rate and change your loan type to save money in the long term. You can even cash out your home’s equity and use the money as you need it.

Refinancing FAQs

What does it cost to refinance?

The total cost to refinance depends on a number of factors like your lender and your home's value. Expect to pay about 2% - 6% of the total value of your loan. The nice thing about refinancing is that you may not have to pay those costs out of pocket, especially since the adverse market refinance fee was eliminated. In some cases, you can get a no-closing-cost refinance so you don't have to bring any money to the table.

When should I refinance my mortgage?

You'll need to think through a number of factors when deciding if you should refinance. Consider market trends - including current interest rates - as well as your financial situation (especially your credit score).

Is it better to refinance or do a loan modification?

The major difference between a refinance and a loan modification is that refinancing gives you a new mortgage while modification changes your current terms to add missed payments back into your balance with the goal of helping you stay in your home. It's also important to note that a modification should only be considered if you can't qualify for a refinance and you need long-term payment relief. Modification typically has a major negative impact on your credit score.

Is a second mortgage the same thing as refinancing?

The new mortgage you get from refinancing replaces your existing loan, an important distinction between getting a second mortgage and refinancing. Another is that a refinance comes with one monthly mortgage payment, while a second mortgage requires two - your original mortgage and your second mortgage. While closing costs are typically lower for second mortgages - such as home equity loans or home equity lines of credit (HELOCs) - they usually come with higher interest rates than a refinance does. Review what works best for you before deciding on a financing option.

Will refinancing my home affect my credit?

When a homeowner refinances their mortgage, the lender pulls a hard inquiry and runs a credit report on the borrower's history. This approval process will lower your credit score but only for a short period of time. As long as you don't open any other credit cards and continue repaying any debts you have, your credit score can recover after a few months.

What's My Home Worth?

Receive a free monthly email called the "Homebot Digest" that offers homeowners a highly personalized report containing valuable information to empower you to make smarter financial decisions when it comes to your home.

What will Homebot track for you? Take a look below…

Current and historical estimated market value of your home
Appreciation since you purchased your home
Net worth/equity in your home
A breakdown of principal and interest paid
Tips for how to save on interest payments
Your purchasing power to buy an investment property or trade up to a new home
Estimated rental figures for your home (or a room in your home) on services like Airbnb or VRBO
Your current cash-out potential for doing things like consolidating high-interest debt or increasing your home value through home improvement

If you think the value of your home is incorrect, you can challenge the value to improve the future accuracy.

You can cancel anytime, simply click "Unsubscribe" in the Pathway Homebot email.

Why Refinance?

Refinancing is the process of paying off your existing mortgage with a new mortgage. Typically, you refinance your mortgage to reduce your interest rate and monthly payment or change the length (or term) of your mortgage. You may also refinance to take cash out from your home’s equity.

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Fixed Rates
Adjustable Rate Mortgage (ARM)
Conforming Loans
Jumbo & Super Jumbo Loans
FHA, VA, & USDA Loans
Terms from 5 to 30 Years