8 Tips for Refinancing Your Home

home and percent sign covered in dollar billsRefinancing your home can be a pretty tricky and very involved process, especially if you have never done it before. After you’ve gone through the steps to decide whether you should refinance, the tips below will help you through the rest of the process:

1. Specify your reason for refinancing.
Different mortgage rates and types are available based on whether you are looking for lower monthly payments, a lower interest rate, or fixed monthly payments. Specifying upfront can avoid confusion later.

2. Determine your break-even point.
Just because the current interest rate is lower than the one you’re abiding by doesn’t mean it’s a good idea to refinance. Itemize all the costs involved with refinancing to determine if you’ll have a better deal after all is said and done. Use a mortgage calculator to determine how long it will take to regain closing costs after refinancing. And remember that a “no closing costs” refi *does* in fact have closing costs!

3. Lock in your rate.
Once you settle on a interest rate, have your lender put it in writing. You don’t want to find yourself going through the whole refinancing process only to have your rate change for the worse before the procedure is complete!

4. No cost, no way.
Sometimes home owners are tempted by no-cost refinancing but these are not no cost at all. Closing costs apply, just as they do during a home sale.

5. Don’t change your credit or bank accounts.
In the final days before a mortgage closes, lenders often ask for a second credit report. As such, don’t open any new bank accounts or lines of credit until after the mortgage process is completely final. You could run the risk negatively impacting your credit.

6. Consider changing your mortgage length.
Refinancing is the perfect time to consider shortening your mortgage length. Most people know about 15-year and 30-year mortgages but there are other options too!

7. Consider paying points.
Refinancers are offered the option to “pay points” on their mortgage: paying an upfront sum to permanently lower your mortgage.

8. Invest.
Instead of spending the money you save with your refi, plan to invest it instead. Another option is to use the savings to further pay down your mortgage.

Do you have refinancing tips to share? Join the conversation in the comments section below!


  1. I do like that you suggested considering to shorten your mortgage length when you decide to refinance your home loan. This is something that I will make sure to remember because one of my friends is interested in refinancing her home. She mentioned that she wanted to make sure that she’ll be able to complete paying her house for a shorter period of time. Thanks for sharing this.

Leave a Reply