Top 5 mortgage refinance questions answered

If you’ve got mortgage refinance questions, we’ve got answers. (iStock)

Record interest rates have mortgage borrowers refinancing in unbelievable numbers. According to the latest weekly survey from the Mortgage Bankers Association (MBA), refinancing activity is up a staggering 124% from where it was this time last year.

With that in mind, if you've been thinking about joining the crowd, we've brought you answers to some common mortgage refinancing questions. Read them over so that you know what to expect from this process.

1. Is it a good idea to refinance your mortgage now?

Doing a mortgage refinance in the current environment is all about capitalizing on record-low interest rates. The average interest rate on a 30-year, fixed-rate loan is currently just 2.79%, according to Freddie Mac. That number is over a full percentage point lower than it was one year ago.

However, there’s no telling how long these interest rates will last. Though the Federal Reserve seems to intend to keep mortgage interest rates low for the foreseeable future, the Mortgage Bankers Association has reported slight increases over the last few weeks. If your goal is to capitalize on record low refi rates, it may be better to do so sooner rather than later.

If you haven't yet refinanced your mortgage, then you should compare rates and get started on the application process now. Don't leave money on the table! Fill out some online forms and see how much you could save today.

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2. What do you need to qualify for refinancing?

Qualifying for a mortgage refi is actually quite similar to qualifying for a mortgage. in this case, mortgage refinance servicers want to see that you have sufficient income to cover the cost of the new home loan, a decent credit score and that you haven't taken on too much other debt.

If you're doing a cash-out refinance, they're also going to want to see that you have a sufficient amount of equity built up in the home to borrow against.

Want to explore all of your loan options in one place from multiple lenders? Visit Credible today.

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3. Does refinancing lower your monthly payment?

With mortgage refi rates as low as they are, you will likely be able to save on mortgage payments by securing a lower interest rate. Put simply, the less interest that accrues on the loan each month, the less money you will have to pay overall. Additionally, if you switch from a 30-year loan to a 15-year loan, you'll likely be given a better interest rate, which can also help you save.

That said, there are other ways that you can lower your monthly payment. For example, if you didn't make a big down payment when you were a new homebuyer, but you've built up equity in the home over time, you may be able to get rid of your private mortgage insurance (PMI) requirement.

If you want to see how much you can save, use an online mortgage refinance calculator to get a better idea of what your new cost could be. If you’ve decided that refinancing your home loan is right for you, visit Credible to find personalized rates and lenders all in one place.

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4. Is it better to refinance with your current mortgage lender?

No, you don’t need to refinance with your current mortgage company, especially if your goal is to be given the best mortgage refinance rates. Here, the best personal finance advice we can give you is to shop around. Unfortunately, banks and lenders will all offer you different mortgage rates and will all have different fee structures, which can affect the overall cost of your loan.

For best results, you should get at least three quotes before deciding who to go with for your refinance. Do your best to give each lender the same information so that you can be sure that you're making an apples-to-apples comparison when you have the quotes in hand.

If you’re ready to start shopping around, Credible can help you compare rates and lenders from the comfort of your own home in just a few minutes.

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5. Can you negotiate a mortgage refinance offer?

The good news is that it is possible to negotiate some aspects of your mortgage refinance offer. Specifically, you can ensure that you are given the best interest rate possible by working to get your personal finances in good shape. The stronger your application, the lower your interest rate is going to be.

However, in addition, it's also possible to negotiate some of the lender fees. Just be aware that in exchange for waiving their fees, some lenders will try to charge you a higher interest rate.

When it comes to comparing mortgage lenders, Credible is your go-to source. Credible can help you secure lower rates — or connect you with a loan officer for further assistance.

The bottom line 

If you think you're ready to refinance your mortgage, the first step is to shop around and to compare rates and lenders in order to find the best lender for your financial situation.

Visit Credible to be put in contact with experienced mortgage lenders who can answer any questions you have about the refinancing process.

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