Refinance
Getting Started
When you refinance you are paying off your existing mortgage so that you can take out a new one. You can cut your monthly payments and save interest by refinancing at a lower rate of interest. You can also turn the existing equity in your home into cash.
Before you get too involved in the refinancing process, it is important that you educate yourself and give careful consideration to a number of important questions. Use the information provided below to help you learn more about the refinancing process.
The Refinancing Process
Thinking about refinancing your mortgage but feeling unsure about the process? Are you wondering if you can lower your monthly mortgage payment but aren't sure if it would be worth the cost of refinancing?
The refinancing process is similar to the one you followed when you got your first mortgage. In a nutshell, refinancing involves paying off your existing mortgage and taking out a new one. Your new mortgage could be at a more attractive interest rate, for a different term, or an entirely different type of mortgage (such as refinancing from a fixed-rate to an adjustable-rate mortgage).
If it has been a few years since you got your current mortgage, some of the terminology you'll hear as you consider refinancing may be similar, but other words may be new to you. You may recognize words such as credit report but phrases like prepayment penalties or discount points may be less familiar. As you proceed through this section, you can refer at any time to our glossary of mortgage- and lending-related words and phrases. It will help you when you discuss your refinancing options with your current lender or a Fannie Mae-approved lender, who may be able to offer mortgage products your current lender doesn't provide.
The Refinancing Process: Start
A good place to start when considering whether to refinance is to ask yourself several questions. How long do you plan to stay in your home? Is the current mortgage interest rate more attractive than the one you have? How much equity do you have in your home?
You may want to take advantage of lower interest rates to reduce your monthly mortgage payments or you may want to build equity in your home faster by refinancing to a shorter-term mortgage. Ask several Fannie Mae-approved lenders about the interest rates they offer, as well as any costs associated with refinancing.
You may want to start your search for a new mortgage with the lender you used the first time. Sometimes, this lender will give you a better deal to keep you as a customer. You can also get refinancing information from a real estate sales professional you've worked with in the past. Homepath.com offers a list of Fannie Mae-approved lenders that you can use to narrow your search for the Fannie Mae mortgage that's right for you.
Here is a list of the most common types of mortgages with which you could refinance.
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