Mortgage Refinance FAQs
We have the answers to the most common mortgage refinance questions.
Have questions about how to apply for a mortgage refinance?
We have answers. Please feel free to reach out directly to our loan officers if you have further questions. We look forward to hearing from you!
What is mortgage refinancing?
A mortgage refinance is when a homeowner gets access to a new mortgage loan to replace the existing one.The reasons for this could include getting a lower rate, reducing the term of the loan, access the equity built up in the house for cash, or cancelling mortgage insurance premiums.
Is a refinance a good idea for me?
Click here for a calculator that determines whether the decision to refinance your mortgage loan is a good one based on the terms you enter for your current loan and for the refinance loan that you are considering.
What are the different ways I can refinance my home loan?
There are essentially two different ways to refinance your home loan:
1. Cash-out refinance - This replaces your current mortgage with a new one for a higher loan amount that includes both the original loan balance and an additional portion towards closing costs, if applicable, and cash to you. You are basically using the equity you’ve built up with your house to go towards other things you need, like home improvements or college tuition.
2. Rate and term refinance - Rate and term refinancing is done to either change the interest rate of the loan if the market rate is lower than the current loan rate, or change the term of the loan.
1. Cash-out refinance - This replaces your current mortgage with a new one for a higher loan amount that includes both the original loan balance and an additional portion towards closing costs, if applicable, and cash to you. You are basically using the equity you’ve built up with your house to go towards other things you need, like home improvements or college tuition.
2. Rate and term refinance - Rate and term refinancing is done to either change the interest rate of the loan if the market rate is lower than the current loan rate, or change the term of the loan.
What are reasons to refinance my home loan?
There are a number of reasons that homeowners want to refinance their current mortgage loan. Here are the most common:
1. Your current mortgage has rates well above the current market
2. You want to switch from an adjustable-rate loan to a more secure fixed-rate loan
3. You want to lower payments for improved cash flow
4. You have equity built up in your home and you need access to cash
1. Your current mortgage has rates well above the current market
2. You want to switch from an adjustable-rate loan to a more secure fixed-rate loan
3. You want to lower payments for improved cash flow
4. You have equity built up in your home and you need access to cash
What is a cash-out refinance?
Cash-out refinancing replaces your current mortgage with a new one for a higher loan amount that includes both the original loan balance and an additional portion towards closing costs, if applicable, and cash to you. You are basically using the equity you’ve built up with your house to go towards other things you need, like home improvements or college tuition. There are some minimum requirements to be met, but if you need cash and you have built up equity in your home, this could be a solution for you. Here's more information about cash-out refinancing.
What is rate and term refinancing?
Rate and term refinancing is done to either change the interest rate of the loan if the market rate is lower than the current loan rate, or change the term of the loan. Here's more information on rate and term refinancing.
When is it a bad idea to refinance?
You should not refinance your current mortgage if:
1. You have had your mortgage for a long time and most of your payments are being applied to principal
2. Your current mortgage has a prepayment penalty if you pay your loan off early
3. If you are planning to move in the next few years
This refinancing calculator helps determine if refinancing is worth it.
1. You have had your mortgage for a long time and most of your payments are being applied to principal
2. Your current mortgage has a prepayment penalty if you pay your loan off early
3. If you are planning to move in the next few years
This refinancing calculator helps determine if refinancing is worth it.
How much equity do I need to refinance?
How much equity you need to refinance depends on the type of loan and the lender. Some lenders require at least 20% equity, while others only 5%.
How much does it cost to refinance?
Refinancing includes closing costs, which can range from 2% to 5% of the mortgage balance. Here's a tool calculates your mortgage refinance closing costs for a given set of loan terms. The calculator lumps settlement charges into two categories: origination charges and other settlement services.
What will my refinancing closing costs be?
Click here for a calculator that determines your mortgage refinance closing costs for a given set of loan terms. The calculator lumps settlement charges into two categories: origination charges and other settlement services.
Do I need good credit to refinance?
To refinance you will be going through essentially the same process as when you created your first mortgage loan, so having good credit will play a role. Having bad credit can prevent you from getting a refinance with a conventional lender's requirements, but you still may be able to get a refinance using an FHA loan.
What's the first thing I do if I want to refinance a home mortgage?
Once you decide that you would like to refinance your home loan for whatever reason, the first thing to do is to shop around for the best rate. And getting the best rate means having a good credit score, so you'll want to know what that is, and see if you can get it as high as possible. You'll also want make sure you can pay any up-front and closing fees associated with the loan. Here's a blog that can tell you more about getting started with a refinance loan.
What is a streamline refinance?
Streamline refinancing is a mortgage refinancing process that reuses the original mortgage loan's paperwork to allow for quicker refinancing approval. This option is popular for borrowers who want to take advantage of lower interest rates or get out of an adjustable rate mortgage. Streamline mortgages are offered through both the VA and FHA.
What is the minimum required loan amount?
A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.
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What Our Customers Say
Robert R., January 28, 2022
★★★★★ (5)
"They made the refinance process really easy. I had some questions that while seemed complex got answered promptly and completely. The process of document delivery and upload was really convenient. Thanks!"
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