- [Mortgage Tips]() [Home]() > [Blog]() > How to Refinance a Mortgage: A Roadmap to Follow # How to Refinance a Mortgage: A Roadmap to Follow May 15, 2026 [Schedule a consultation **]() **Get a quote** First step ** Only takes 1 minute ## Select a loan type - ** Personalized quote - ** Expert guidance Or [Schedule a consultation **]() So, you have had your first mortgage. A totally new field full of pitfalls and unexpected twists for any novice. But once the [anxiety is over]() and you start learning the ropes of this dynamic financial domain, you realize you could have done things differently and struck a better deal. Is it too late to change the loan conditions? No. You can refinance your mortgage. ## Refinancing a Mortgage: Definition and Reasons The term "mortgage refinancing" refers to replacing an existing mortgage loan with a new one. Why do borrowers decide to ditch the loan they currently have and go for a different bargain? - High interest rates. People discover that their monthly payments and, thus, overall interest costs can be much lower after the mortgage interest rate plummets due to internal or [external factors](). - A desire to change loan terms. A customer would like to switch from a 30-year deal to a 15-year one to repay the loan faster, or extend the term to lower obligations. - Opting for a [fixed rate instead of an ARM](). An Adjustable-Rate Mortgage (ARM) is subject to potential payment increases, whereas a fixed rate is always stable. - Eliminating FHA mortgage insurance. Federal Housing Administration (FHA) loans come with mandatory insurance, which increases the amount you pay. By switching to a conventional loan, you cut down on payments. - Cashing out equity. If you refinance for more than you owe, you can spend the difference in cash to pay college tuition, pick up the tab for home improvement, etc. - Changing the number of borrowers. You can add a borrower if someone agrees to share the financial burden with you, or remove one (say, after a divorce). No matter what reason (or a combination of them) you might have, the mortgage refinancing procedure is essentially the same and will take you from 30 to 45 days. ## A Step-By-Step Guide to Refinancing a Mortgage Here is how you refinance your mortgage in 6 simple steps. - Get to grips with the goal. You should understand why you are doing it. Is it a monthly payment reduction, shortening the term, switching to another rate, etc.? - Check your credit score and equity. The higher the score, the more favorable the conditions you may be offered. For instance, to get a conventional mortgage without insurance, you should have a 620+ on your score and at least 20% equity (that is, the total value of the acquired property minus the sum you still owe). - Select a lender. Sticking with the current one is not always the best policy (after all, you aren’t satisfied with the mortgage it has granted, are you?). Try to take three lenders (or more, if you have time and inspiration) and perform their out-and-out comparison regarding fees, rates, and terms. Opt for the most balanced combination of basic parameters. - Prepare the papers. You should collect all financial documents (tax returns, bank/brokerage statements, pay stubs, etc.) and submit them to the lender. Make sure you [lock in the interest rate]() to prevent it from rising before the red tape is over. - Get ready for the home appraisal and underwriting. The process is identical to the one you went through when you were buying the property, and the lender determined its value. Unfortunately, the routine isn't free (it is going to cost you a couple of hundred dollars). Then, the financial documents you have submitted are verified. - Close the deal. After you get approval and sign all the necessary papers, there's one more expenditure item: closing costs of several thousand dollars. The sum depends on the total loan amount (usually between 2% and 6% of it). At first sight, it’s not rocket science. However, to be on the safe side, borrowers often [seek professional assistance]() to let the process go like clockwork. ## How LBC Mortgage Can Help You We are a team of seasoned mortgage experts who offer a [broad variety of financial products](), such as conventional loans, bridge loans, landlord loans, commercial loans, vacation home mortgages, construction loans, portfolio loans, and more, to customers in 10 states and nationwide. During 18 years of presence in the financial market, we have accumulated a wealth of experience and knowledge to recommend the loan that will fit a borrower's requirements perfectly and provide qualified advice at every step of your journey to owning a home of your dream. [Contact us]() for a free consultation. ## A Recap If you are a mortgage holder dissatisfied with the terms, interest payment amount, adjustable rate, mortgage insurance, or any other loan condition, you can refinance your mortgage, that is, replace the existing one with a new deal. To do that, you should understand the end goal, ensure your credit score and equity make you eligible for better loan agreement provisions, [find a reliable lender](), prepare financial documents, lock in the interest rate, get a home appraisal, and close the deal. Make your next move ### What could your mortgage look like? Turn your plans into a conversation. Explore loan options with guidance from LBC Mortgage. [Get my personalized quote **]() **Author:** [Alex Shekhtman CEO & Founder, LBC Mortgage]() [** Previous Post]() [Next Post **]() ## Frequently Asked Questions - ### 1. Can you refinance a mortgage at any time? ** Technically – yes. But in the event, lenders that have struck a beneficial deal aren’t happy when a borrower wants to change it for a loan that promises less profit. To discourage people from doing so, lenders impose limitations that comply with federal regulations and depend on the type of loan you have. Usually, conventional mortgages and government-backed loans insured by the Federal Housing Administration (FHA) and the U.S. Department of Veteran Affairs (VA) can be refinanced after 6 months of owning a home and performing on-time payments, otherwise the original lender will turn down refinancing applications. For cash-out refinancing, lenders usually agree to refinance a mortgage after 6 or sometimes even 12 months of ownership. Also, early refinancing may trigger penalty fees called the Interest Rate Differential (IRD), especially if you break a fixed-rate mortgage before the expiration date. The IRD is the difference between your current and the new mortgage rate for the remaining term of loan. Such fees amount to a considerable sum, typically not less than 3 months’ interest. Plus, there are also closing costs which are seldom less than $2,000 but are often higher than $5,000. - ### 2. Is refinancing a mortgage worth it? ** There is a mission-critical metric called the break-even point that will help you understand if refinancing a mortgage is worthwhile. It denotes the amount of time (typically measured in months) it will take your monthly savings to cover the new mortgage’s closing costs and serves as a cost recovery date showing when refinancing a mortgage will land you in the black. To determine it, you should divide the total closing costs by the monthly savings. If you aren’t going to sell the house or move elsewhere before this time expires, refinancing a mortgage is worth a shot. In addition to figuring out the break-even point, a lender should also consider other factors that speak in favor of refinancing a loan and make them eligible for better mortgage agreement conditions. These include a drop in interest rates (not less than 1% and preferably more), improvement in your credit score by 20-40 points, income growth that enables you to shorten the mortgage terms, or building sufficient equity to opt out of private mortgage insurance (PMI). Sometimes, a lender has cash-out needs for home repairment or debt consolidation that make mortgage refinancing a necessity rather than a choice. Refinancing a mortgage is not a good idea when the new loan has a longer repayment term than the current one or when the expenditures the refinancing will incur outweigh the interest saving. - ### 3. What factors influence the mortgage loan interest rate? ** The mortgage interest rate is calculated piecemeal for each borrower and differs from lender to lender. The rate amount is determined based on two kinds of factors. Borrower-specific financial indices reflect individual characteristics of the person applying for a loan. Here belong the credit score (a high score of 740+ makes a person eligible for lower interest rates), the size of a down payment (20%+ of it may lead to lower rates and skipping private mortgage insurance (PMI)), debt-to-income (DTI) ratio (if it is low, you can get a lower interest rate), and the type of loan (short-term loans usually come with a lower interest rate). Economic factors are related to market conditions that often tend to be rather volatile. Here belong inflation (high inflation will cause the interest to rise),, bond market situation (especially 10-year treasury yields), federal reserve policy (the raising or lowering of the federal funds rate impacts the interest rates correspondingly), and the overall economic growth (a rise in living standards triggers increased demand for housing and consequently higher interest rates). Finally, the property itself may condition the mortgage rate since its amount is different for a primary residence, second home, and investment property. The loan-to-value (LTV) ratio also matters as the low home’s appraised value in comparison with the loan amount promises a lower interest rate. Besides, the interest rate also differs from state to state. Your home. Your goals. Your next step. ## Let's find a loan that fits *your life.* Buying or refinancing? Start with your goals. We'll help you explore the possibilities. 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