Refinancing a home loan means replacing your existing mortgage with a new one that has different terms, usually with a new lender. When you refinance, you typically pay off your old mortgage with the proceeds from the new loan, and then start making payments on the new loan.
The most common reason to refinance a home loan is to take advantage of lower interest rates, which can result in lower monthly payments and interest savings over the life of the loan. However, there are other reasons to refinance, such as to change the length of the loan term or to switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa.
When you refinance your home loan, you will be subject to the same underwriting and qualification process as when you first obtained your mortgage. This includes providing documentation of your income, credit score, and other financial information, as well as paying closing costs and fees associated with the new loan. It’s important to carefully consider the costs and benefits of refinancing before deciding whether it’s the right option for you.