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What is the Refinance Process?

Your home can be your biggest investment, so during the life of your loan it may make good sense to refinance to reduce your monthly mortgage expenses, take cash out to consolidate debt, or leverage your home's equity to pay for a major expense. There are two refinance options available from Freedom Mortgage:

Home refinance, which is also called a "Rate and Term" home refinance. The refinance is designed to reduce your interest rate, lower your monthly mortgage payment, and/or reduce your loan term. By refinancing, the total finance charges may be higher over the life of the loan.

Cash-out refinance, which allows you to tap into the equity in your home to get cash out to consolidate high-interest debt or other bills, make home improvements or pay for a major expense.

With both options, you pay off your existing mortgage and take out a new loan. A refinance can be a quick and easy process especially when you already have an existing loan. A cash-out refinance requires a little more time, since there is additional paperwork and an appraisal is required.

We make it easy with 4 simple steps to get you on your way with your home refinance.

Step1 icon of document check list for eligibility Determine eligibility Step2 icon of a target for goals Determine your goal Step3 icon of a lock with a dollar symbol Lock in your rate Step4 icon of document being signed Sign documents & close

icon of document check list for eligibilityStep 1

Determine eligibility

If refinancing your existing loan without taking cash out, you can take advantage of a streamlined process.

  • VA loans

    For VA loans, that means you will not need a Certificate of Eligibility (COE) with a straight refinance. If you want to refinance to a VA cash out, you will need to prove your VA eligibility.

    A COE proves VA home loan eligibility through the Department of Veterans Affairs. To receive one, you must complete the appropriate government forms as well as your statement of military service. A COE can be obtained online through the VA benefits website and Freedom Mortgage can help you with all the details.

  • FHA loans

    To get an FHA rate and term or cash-out refinance, you need to have an existing FHA home loan. You also need to be current on the last six months of payments and have a minimum of 210 days since the initial closing of the loan. Refinancing must also improve the borrower?s position financially such as to a lower rate or term.

  • USDA loans

    To be eligible for a USDA refinance, you need to currently have a USDA loan and be current on payments for the last six months. The existing loan must have closed at least one year before your refinance request. There is no cash out opportunity with a USDA loan.

  • Conventional loans

    You can refinance any type of loan with a conventional refinance and any type of property. You need to be current on your mortgage payments and if you have a loan-to-value ratio of more than 80% you will need to pay Private Mortgage Insurance (PMI).

  • Your credit score

    Your credit score is based on several factors, including how much debt you have, your credit history and whether or not you pay your bills on time. Your credit score can affect whether or not you'll meet the requirements for a loan.

    You are eligible for a free annual credit report through www.annualcreditreport.com. Read through it carefully and make sure there are no mistakes. If there are any errors, follow the information provided to correct any accounts so that your report is as accurate as possible. You may order reports from all three nationwide credit reporting companies at the same time or you can stagger your requests so that you receive three free copies (one from each company) over a 12-month period.

    The FTC?s website further notes that, starting this year and lasting through 2026, everyone in the U.S. can get six free credit reports per year by visiting the Equifax website or by calling 1-866-349-5191. That?s in addition to the one free Equifax report (plus your Experian and TransUnion reports) you can obtain at www.annualcreditreport.com. If you want a credit report that includes your credit score, you will have to pay a fee.

    You may want to avoid opening a new credit card account or making any large expense purchases when applying for your home loan, as that could change your credit and may affect your eligibility.  

icon of a target for goalsStep 2

Determine your goal

Once you have confirmed your eligibility, it is time to focus on your refinance goals. Do you want to reduce payments to meet your budget, move from an adjustable-rate-mortgage to a fixed rate, consolidate debt, or do you need cash?

  • Point 1 Is your current mortgage interest rate higher than today's market rates?
  • Point 2 How much could you save by refinancing over the life of your loan?
  • Point 3 How long do you plan to stay in your home?
  • Point 4 Would refinancing to a shorter term loan help you pay off your mortgage faster?
  • Point 5 How much equity do you have in your home and could you take cash out?
  • Point 6 What is your total outstanding debt that you may be able to pay off with a cash out refinance?

Not sure of the answers to these questions or have more questions? Don't worry, a Freedom Mortgage Loan Advisor can guide you every step of the way with options based on your personal goals. Give us a call and we'll help simplify things for you.

Once you have explored your financial situation and decided to refinance, you will complete your application. Your Loan Advisor will ask you questions about your income, debts and expenses and will check your credit.

If you are taking cash out, a loan processor may ask for additional documents including W2s and verification of employment. It's important that you have had a clean payment history for the last 12 months and no bankruptcy or other credit issues.

Typically you can roll the closing costs and fees into the balance of the loan to avoid having to pay these fees at closing. Your Freedom Mortgage Loan Advisor will work with you to quickly process all of the documentation needed.

icon of a lock with a dollar symbolStep 3

Lock in your rate

Once you submit your application, your Freedom Mortgage Loan Advisor can help you determine the term and rates that are available to you and what your monthly cost will be. Once you find a rate that meets your goals, then you can lock it in to secure that rate for a certain number of days until you close the loan.

icon of document being signedStep 4

Sign documents & close

Refinancing your existing mortgage is typically faster than the home buying process because you can schedule your closing without needing to select a new property, negotiating a sales price or coordinating a closing date with the seller.

To prepare for closing, make sure you bring the necessary items such as:

  • point 1 Government-issued photo ID for borrower and co-borrower
  • point 2 Cash necessary for closing costs and fees (typically a cashier's check; not a personal check), unless you are rolling the costs into the loan
  • point 3 Binder for homeowners' insurance (hazard insurance) and paid receipt

Once you're done with your closing, you will have cash in hand, a shorter term or a lower rate which can give you peace of mind.