The mortgage industry is full of misconceptions and misunderstandings. New homebuyers often go into the mortgage process expecting many things that just don’t happen, and even individuals who are already homeowners may have misconceptions about the mortgage industry. Today, we’re out to tackle the “refi lie.”
The rumor: In order to get a refinance, your new rate must be a minimum of 2% lower than your current rate.
The truth: No one really knows where this rumor came from, or when it started, but the truth is – it’s not true.
You can apply for a refinance for a variety of reasons – it’s not always a better rate – and you don’t even necessarily need to get a better rate in order to refinance. Homeowners refinance for a wide array of reasons. Maybe you are simply looking to lower your monthly payments by stretching out your loan for a few more years, or maybe you’re looking to pay your loan off earlier and make higher monthly payments.
Maybe your decision to refinance has little to do with interest rate or payment – you might need to do some home renovations, or even need to finance part of your child’s education. So what do you need for a refinance? Well, your mortgage banker can answer that question. However, you can learn more about the refinance process here, and learn about what documentation you’ll need to get started.