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Refinancing your mortgage can help you obtain lower interest rates or tap into your equity to pay off outstanding debts. Below, we walk you through the necessary steps if you decide that refinancing your mortgage is a great option for you.

What Is Mortgage Refinancing?

When you refinance your mortgage, you replace you’re existing home loan with a new one. Mortgage refinancing is a great way to reduce your interest rates or decrease your monthly payments.

When you purchase a home, you get a mortgage to help you pay for it. The money will go to the person selling the home. When you refinance your mortgage, instead of the money going to the seller, the new mortgage will pay off the balance of your previous home loan. Refinancing requires you to qualify for the loan in the same way that you did when you got your initial home loan.

Why and When Should You Refinance?

Reduce Your Monthly Payments

If you want to pay less every month, refinancing your mortgage will allow you to get a lower interest rate. Another way to do this is to extend the loan term. However, the biggest disadvantage of extending your term is that you will end up paying more interest in the long run. 

Move From An Adjustable To A Fixed-rate Loan

Interest rates on adjustable-rate mortgages have the potential to either go up or down, which can lead to larger payments over time. When you refinance your loan, you can move to a fixed-rate mortgage, which remains the same each month. The predictability that this provides makes planning your budget an easier task.

You’ve Decided To Refinance, Now What?

The next step is to use a mortgage refinance calculator to help you find the best mortgage. It’s important that you know or have an idea about your new interest rate and the loan amount.

The mortgage refinance calculator will calculate your monthly savings, payment amount, and long-term saving, while considering the estimated costs of your refinance.

Using a refinance calculator will give you a great idea of what to expect when refinancing, and acts as a great first step to understanding what a refinance will look like for your unique situation.

Shop The Best Refinance Rate

Now comes the hard part. You’ll want to research in order to find the best offers. This can be a tough job and it’s best to have a professional by your side with your interests in mind to ensure that you are choosing the right lender. SAN Mortgage is the team you want behind you when making the decision to refinance. We have the knowledge and expertise to ensure that you make the most beneficial decision when it comes to your mortgage.