Getting a mortgage helps you to become a homeowner. Refinancing mortgage helps you change the repayment terms of your original mortgage. Homeowners use this service for multiple reasons. Knowing how to get the best rates and the right time to purchase can help you save on interests amounting to thousands of dollars on interests. An individual’s decision to refinance can be based on their present and future financial position and not on the current mortgage or interest rates.

When to refinance mortgage
The following are the situations when you can consider refinancing a mortgage:

To secure a lower interest rate
If you want to reduce the interest on your mortgage by at least 1% or 2%, you can consider refinancing.

Reduce repayment term
If you want to pay off your mortgage faster, you can also consider refinancing your mortgage to a shorter term, when interest rates fall. Though it might cause any significant change in the monthly interest payment, it can help you repay the loan faster.

Convert to a fixed-rate mortgage or an ARM
If you have an Adjustable-Rate Mortgage (ARM), periodic adjustments can cause the rates to be more than a fixed-rate mortgage. Convert it to a fixed-rate mortgage with lower interest to save interest.

If you have a fixed-rate mortgage, convert it to ARM to reduce monthly repayments only when there is a fall in interest rates. Do not do it when the interest rate rises.

To consolidate debt or build equity
Equity on your home builds when you repay the principal and when prices appreciate. You can consider refinancing if you want to use the equity in an emergency or for a major expense for the house.

You can also refinance a mortgage to consolidate debts to replace it with a lower-interest mortgage. It is a good option if you want to get all your debts in one place.

How to refinance mortgage

Make preliminary calculations
Use online mortgage calculators, input your current information and estimate the new interest rate or loan amount you want. The calculator gives your monthly savings, monthly payment, savings after considering refinancing costs.

Apply for a mortgage
You can approach three to five lenders. They will send you a three-page loan estimate within three days, with details of loan terms, payments, estimated costs and fees.

Choose a lender
You can compare the estimates and choose the one that suits you best with maximum savings. Costs are likely between 2% to 6% of the loan amount. Talk to a loan counselor from the institution, lock the interest rate, negotiate the best rates, and reduce costs and fees.

Finalize the loan
Once you pay the costs mentioned in the loan estimate, you can finalize and close the loan. It takes about 30 to 45 days for closing the loan from the time of application. Some companies are quick and complete the process in two weeks.

Top four mortgage refinance companies

Quicken
Quickens refinancing operations are known as Rocket Mortgage. They offer a convenient and streamlined online process or in-person loan closing in 50 states. It has one of the widest arrays of loan options, with costs ranging from 3 to 6%.

Nationwide home loans
Nationwide Home loans offer mortgages up to 30 years with customizable terms. They decide loan costs based on interest, credit, debt-to-income ratio, and loan-to-value. Nationwide offers lower interest if you have a good credit score. They only operate in eight states and are very popular for their customer service and turn-times.

AmeriSave
AmeriSave is popular for its transparent operations, excellent customer, and accurate quotes without hidden fees. It provides a variety of refinance options with low-interest rates. It is present in all the states except one state.

LenderFi
LenderFi processes your application quickly. You can close a loan within two weeks. It does not charge lender fees and instant online approval. It offers multiple refinance options for all types of homes. They are present in almost all states.