Can you refinance with the same back?
You can usually refinance with the same bank or lender that you originally got a loan through. But keep in mind, your mortgage lender is the institution that originated your loan, and that may be different from your current servicer.
Yes, you can refinance your mortgage with the same bank or lender. According to a Black Knight report, 28% of all homeowners who refinanced in the first quarter of 2021 stayed with their current mortgage company. This could be a good option if your lender: Offers low interest rates or closing costs.
Refinancing With Your Lender
For starters, it should be a seamless process. Conveniently, your old lender will already have some of your financial documents and records on file, depending on how recently you worked with them. That means you won't have to restart the mortgage process all over again.
Some benefits of working with your current lender on a refinance include: Having an established relationship. Familiarity helps when it's time to reach out with questions or navigate the lender's payment processes, all while keeping your personal finances as streamlined as possible. Paying lower fees.
One common option is to maintain the current repayment term. For example, if you got the original mortgage five years ago, you can refinance to a 25-year term. You can also refinance to a shorter term. Using that same example, you could reduce the payoff term from 25 years to 20 years instead.
Refinancing will hurt your credit score a bit initially, but might actually help in the long run. Refinancing can significantly lower your debt amount and/or your monthly payment, and lenders like to see both of those. Your score will typically dip a few points, but it can bounce back within a few months.
Here we explore the process of refinancing and how long it can take to refinance your home loan. The process to refinance works in a similar way as applying for your original loan and therefore refinancing on average can generally take 4-8 weeks in total.
You'll typically need a home appraisal to refinance your mortgage, both to confirm your home's value and to set your new loan amount. If your refinance appraisal comes in too low, though, you may not be able to refinance unless you use a streamline (no-appraisal) refinance program.
If your property has experienced capital growth, giving you extra equity in the property, refinancing allows you to borrow more than the original mortgage and you can use the extra funds generated to pay-down credit cards and vehicle financing, at a much cheaper rate.
Refinancing the mortgage on your house means you're essentially trading in your current mortgage for a newer one – often with a new principal and a different interest rate. Your lender then uses the newer mortgage to pay off the old one, so you're left with just one loan and one monthly payment.
Do you need a down payment to refinance?
If you want to refinance, no down payment is needed. Still, it does not mean that you won't have to pay anything to refinance your mortgage. You will have to pay closing costs that typically add up to about 2 to 5 percent of the loan amount.
Refinancing your mortgage does not have to negatively impact your home equity. Just the opposite, in fact: The goal of a refi generally is to get a new loan with lower interest rates, making repayments easier and allowing you to build equity faster.
Conventional refinance: For conventional refinances (including cash-out refinances), you'll usually need at least 20 percent equity in your home (or an LTV ratio of no more than 80 percent).
| Product | Interest Rate | APR |
|---|---|---|
| 10-Year Fixed Rate | 6.49% | 6.52% |
| 5-1 ARM | 6.15% | 7.33% |
| 10-1 ARM | 6.95% | 7.80% |
| 30-Year Fixed Rate FHA | 6.52% | 7.20% |
Lower your interest rate
If interest rates have dropped since you first obtained your mortgage, a rate-and-term refinance can provide you with a lower rate. You might also qualify for a better interest rate if your credit score has improved since taking out your current loan.
The cost to refinance a mortgage ranges from 2% to 6% of your loan amount, and you can expect to pay less to close on a refinance than on a comparable purchase loan. The exact amount you'll have to pay depends on several factors, including: Your loan size. Your lender.
The main benefits of refinancing your home are saving money on interest and having the opportunity to change loan terms. Drawbacks include the closing costs you'll pay and the potential for limited savings if you take out a larger loan or choose a longer term.
| Loan type | Minimum score |
|---|---|
| Conventional refinance | 620 |
| Jumbo refinance | Generally 700 or higher |
| FHA refinance | 580 |
| VA refinance | No credit minimum from VA, but generally 620 |
Because refinancing involves taking out a new loan with new terms, you're essentially starting over from the beginning. However, you don't have to choose a term based on your original loan's term or the remaining repayment period.
While the specific documentation needed for a mortgage refinance will vary by lender, you can typically anticipate needing the following: W-2 forms, tax returns, pay stubs, proof of homeowner's insurance, and proof of income and employment history.
How many times can you refinance?
Legally speaking, there's no limit to how many times you can refinance your mortgage, so you can refinance as often as it makes financial sense for you. Depending on your lender and the type of loan, though, you might encounter a waiting period — also called a seasoning requirement.
Refinancing with your current lender may have benefits, like avoiding some of the fees associated with switching lenders. While your current lender might offer competitive refinance rates and terms, it's a good idea to shop around and compare offers from other lenders, too.
Getting a low property valuation could hurt your chances of a successful refinance. Even if you have a great credit score, if a lender thinks you don't have a lot of equity in the property, they may deny the refinance.
While it's always great for the property appraisal to come back higher than the amount you agreed to buy it for, this is no way affects the loan amount you need to qualify for, or the down payment you need to close on the mortgage loan. Both conventional and unconventional mortgage products offer similar requirements.
With a cash-out refinance, you get a new home loan for more than you currently owe on your house. The difference between that new mortgage amount and the balance on your previous mortgage goes to you at closing in cash, which you can spend on home improvements, debt consolidation or other financial needs.
