Step 1: Decide what you want to get out of the refinancing process

There are a lot of reasons to refinance a home, and having a financial target in mind will help you get through the process.

What if you want to pay off your mortgage faster? If you have 25 years left on your 30-year mortgage, refinancing to a 15-year mortgage would help you pay off the loan 10 years faster, so it definitely makes sense to do so.

Do you want to take advantage of the current low interest rate environment? Refinancing to lock in a lower rate will save you money in the long run, as long as you don't refinance into a longer term than what you were currently in.

Step 2: Assess your financial situation

For refinancing to be worthwhile, you'll need a good financial profile, much like when you took out your first mortgage. Examine your finances and see if you can get a decent deal now or if you should wait.

You could be able to get a good interest rate if your credit score is decent.

How much debt do you have compared to your income? For example, if your monthly debt payments have risen but your monthly income has remained constant since your initial mortgage, your rate may not be ideal.

Step 3: Apply for a refinance

You may compare interest rates by getting preapproval letters from many different companies out there, such as Arc Home. If you ask each company for an itemized list of fees, you might find that a lender with a slightly higher rate saves you money in the short term by charging lower closing fees. Then you will determine if the lower rate or lower fees are better for your financial objectives. Be sure to have the following documents ready when you speak to a lender:

•      Bank statements
•      Tax returns
•      Pay stubs
•      Proof of assets
•      Debt Documents
•      Credit score
•      Current Mortgage Information
•      Identification

A lender may conduct a hard credit inquiry to determine your credit score when you apply for preapproval; the inquiry may appear on your credit report and can temporarily impact your credit score. If you're looking for the best rate, a lot of hard inquiries on your credit report will damage your credit score, so be sure you aren't running too many inquiries!

If you restrict your rate shopping to a month or less, credit bureaus will know that you're searching for a mortgage and won't penalize you for each inquiry.

Pick a lender and refinance terms that work for you.

You must pick between a fixed-rate and an adjustable-rate mortgage, as well as a term duration. For example, you could refinance into a longer term to lower your monthly payments or a shorter term to pay off your home faster and save money over time.

Step 5: Home Appraisal.

When you refinance, your lender may request a home appraisal. Since your rate is only locked in for a certain period of time, usually 60 or 90 days, you'll want to arrange the assessment as soon as possible after locking it in.

When refinancing, not all forms of mortgages need appraisals. Your lender will provide the details.

Step 6: Complete the refinanced mortgage process.

Before your rate lock expires, you can close on the loan. The closing method is identical to when you first got your mortgage, only this time you're already living in the house! Be sure to call us today. Arc Home is here to help you achieve your goals!