When you refinance your mortgage, you are applying for a new loan. By refinancing, you are actually paying off the old loan by obtaining a new one. Because you will be obtaining a new loan with new terms, a lender will have to obtain key information and documentation in order to verify you qualify for a refinance.
Typically the following information will be checked when you apply for refinance:
Reasons Why Most People Refinance
To have a more stable monthly payment. Some people chose to refinance from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage in order to have a more stable and predictable monthly payment.
To withdraw some equity from your house in the form of a cash-out refinance. The cash can be used for whatever you need.
To consolidate two mortgages. Some people have two mortgages or a mortgage and a HELOC. They may want to refinance both mortgages into one mortgage to simplify things.
To pay their loan balance down.To change the term of the mortgage. Many people like to compare 15-to-30-year loan options when looking at refinancing. A 15-year loan saves a lot of interest over the life of the loan.
To payoff a mortgage to get rid of PMI or MIP.
