- 1). Research the current home loan interest rates of the bank that owns your mortgage. Now compare that rate to other banks and credit unions. If the best rate is through your current lender, then call and ask about refinancing at a lower interest rate. Most lenders have programs that require no extra documentation, so the process moves much faster.
- 2). Apply through a different lender if your research showed it had the best rates or service for refinancing. Throughout the process, ask about fees wrapped up in the deal. There are fees associated with appraising the value of the home, inspecting the home, having a lawyer handle the contract and even for processing the application. Find out if the bank or credit union plans to service the loan themselves. Some lenders, for example, sell your loan to larger, nationalized companies, which means communication will likely be through the phone or email.
- 3). Examine the offer made by the lender carefully. Most experts agree you need at least a 2 percent reduction in your interest rate to even consider refinancing. Keep in mind that there are fees and other costs associated with refinancing, so think about how much longer you plan to live in the home you are refinancing. Is it long enough to justify this process? Decide whether you plan to pay the total balance before selling.
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