How to Refinance a Mortgage

With mortgage rates still near record lows, many homeowners are opting to refinance their mortgages. Refinancing could potentially help lower your monthly payments, decrease your interest rate, or allow you to take advantage of any equity you’ve built in your home.  

You may be asking yourself, how do I refinance a mortgage? How do I get started? After considering your financial needs (lower payments, money for a remodel, etc.), contact KeyPoint Credit Union to discuss mortgage refinancing options. There are several types of refinance options available. Don’t be afraid to shop around for the new mortgage that best fits your situation. 

Mortgage Basics

Not all mortgage refis are created equal. A refinance will pay off your original mortgage loan and replace it with a new one covering the remaining principal balance on your loan. Ideally, you’d be looking at smaller payments and a lower interest rate. Once you’ve obtained loan rates from your lender, use a mortgage calculator to determine if you could save money on your mortgage payments by refinancing. You’ll need to know your current mortgage amount, rate, term and the number of months paid. Enter that information and compare the savings when you add your new loan amount, rate, points and other costs such as deposits and fees. 

Cashing in On Your Investment

A cash-out refinance allows homeowners to get a mortgage for more than they currently owe, taking the difference in cash. For a simplified example, let’s imagine you bought a home for $1M ten years ago and borrowed $800,000. Since then, you have paid off $200,000. So, you currently owe $600,000. You’re considering a bathroom remodel, which will cost $50,000. With a cash-out refinance, you could borrow $600,000 and get $50,000 of that in cash towards your master bath project.    

Know Your Credit Score

Hoping to get a better rate? Your credit score might be the key. If your credit score has improved since your initial mortgage loan was granted, you may be eligible for lower rates. One of the first – and most important – steps you can take towards refinancing is checking your credit score online. Members can get their FICO® score through KeyPoint online or mobile banking, and request a detailed credit report at Once you’ve obtained the report, review your FICO score as well as the detailed list of delinquencies, if any. If you notice any errors that may affect your score, contact the creditor directly to resolve them.      

Have Funds at the Ready

Even if you’re doing a cash-out refinance, you’ll need to set aside some money for the fees associated with a refinance. These may include application fees, insurance, appraisal costs, underwriting fees and more. If that sounds like a lot, don’t fret: Your lender should provide you with a detailed estimate of the fees and closing costs required to refinance your loan.  

The Bottom Line

Refinancing a mortgage loan is easier than you think. There’s plenty of paperwork and some up-front expenses are required, but refinancing could pay off in the long run. With a little research and some help from your lender, you may be able to lower payments on your home or even take out money to use towards repairs, renovations or personal expenses. For information on refinancing your home loan, contact KeyPoint Credit Union today.