All You Need to Know About Mortgage Refinancing

Before refinancing a mortgage, homeowners should understand how the process works and what role their credit plays. They should also know what tactics they can use to ensure they get the best possible outcome from the refinance.

What Is Mortgage Refinancing?

When you refinance a mortgage, you obtain a different loan on your property to obtain a lower interest rate. Most people refinance to save money, whether to reduce their monthly payments or to pay off their mortgage earlier. Although refinancing is a great way to meet other financial needs, it has notable drawbacks. One of the main risks is refinancing a fixed-rate mortgage to one with an adjustable rate.

How to Refinance a Mortgage in 4 Steps

Mortgage refinancing can seem complicated, but it is actually less complex than most people think. The basic steps are:

Step 1: Choose a New Lender

When you decide to refinance a mortgage, one of the first things you need to do is find a lender. Most lenders do not deal directly with consumers, so you must go through a mortgage broker. Talk to your bank or call a mortgage broker to find a lender.

Step 2: Apply for the New Mortgage

In this step, your mortgage broker will begin the application process. First, your broker will review your finances to see if you qualify for refinancing. Your broker can also recommend other lenders that might offer you a better deal. Once you have a lender, you will sign the mortgage agreement and make a down payment.

Step 3: Pay Off the Old Mortgage

When you refinance a mortgage, you have to close the old mortgage. This means paying off the balance in full or selling the property if you still have a mortgage.

When you close the old mortgage, you must also pay any fees. For example, if your existing loan has an escrow account and you have been paying for homeowner’s insurance, you will have to pay those fees.

Step 4: Sign the New Mortgage Documents

The final step is to complete the mortgage refinance process. You will sign the new mortgage document and a deed of trust to do this.

Also, you will sign the disclosures, which are the documents that explain your terms and fees and the loan terms. The disclosures list the programs for which you are eligible to receive.

When to Refinance

The best time to refinance your mortgage is when you are in the best possible financial situation. Lower your expenses to the point where you can afford to make payments on a higher principal. This minimizes your risk of default and helps you pay off the mortgage faster.

If you can reduce your monthly payments by half, you may be eligible to refinance. However, if you can only reduce your payments by 20 percent, you may not be able to refinance. Because you will be making more monthly payments, it is harder to pay off the mortgage in a shorter period.


Refinancing a mortgage is a smart decision if you can save a lot of money. You don’t have to worry about investing your money in stocks or other financial products. You can lock in a fixed-rate loan and save money. If you choose to refinance your mortgage, consider your options carefully and the risks associated with each one.

Whether you’re buying a home, refinancing, or need cash from your home equity, Hawkins Home Loans is your online resource for a stress-free process, incredibly low rates, and amazing service. Our goals are to fulfill your mortgage needs with the friendliest customer service, secure a loan you can feel good about, and make you a happy homeowner. If you need a refinance loan in California, we’ve got you covered! Get in touch with us now and let’s talk!