+ LR-Icons —
×

You are leaving laurelroad.com

By clicking Continue, you will be taken to a third-party website. Laurel Road, a Brand of KeyBank N.A., is not responsible for the content, links, privacy policy, or security policy of third-party websites.

Continue Go Back
×

Thanks for your interest in joining us!

Laurel Road’s innovative engineering culture is enhanced by the scale and resources that come with being part of KeyBank N.A., Member FDIC. To see the full job details and apply for this role, you’ll be redirected to our KeyBank recruiting site.

Apply Now
  • Student Loan Help
    • Student Loan Forgiveness Consultation
      Examine your forgiveness and repayment options with our student loan specialists.
    • Public Service Loan Forgiveness (PSLF)
      Learn how to qualify and stay on track for public service loan forgiveness.
    • Income-Driven Repayment (IDR)
      Understand your income-based repayment and forgiveness options.
    • Student Loan Refinancing
      Explore simple refinancing options that could help you save on student loans.
  • Lending
    • Student Loan Refinancing
      Fast, easy refinancing—without the kinks.
    • Mortgages
      Buy a home or refinance with confidence.
    • Personal Loans
      Fund the unexpected with a personal loan.
  • Banking
    • Checking with Rewards
      From monthly cash to student loan rate discounts, get the Checking rewards that meet your needs.
    • Cashback Credit Card
      Redeem cashback towards student loans.
    • High Yield Savings
      Build your savings with a highly competitive interest rate.
  • Resources
    • Financial Resources
      Navigate your financial journey.
    • Laurel Road Perks! ®
      Exclusive member discounts on premium brands, subscriptions, and services.
    • Customer Testimonials
      Hear what our customers have to say.
    • FAQs
      Get answers to frequently asked questions.
    • I’m Also a Doctor
      A new series documenting the extraordinary passions of doctors.
  • For Doctors
  • Nurses
  • Sign In
  • Quick Guide to Refinancing Your Mortgage

Quick Guide to Refinancing Your Mortgage

Now that you’ve been in your home for a while, you may want to consider refinancing your mortgage. Whether you’re just exploring the idea or ready to start the process, this guide will help you make the right decisions for you and your family.

Published August 30, 2023

10 min read

Table of Contents

  • Start with your goals
  • Understand the costs and risks
  • Refinancing step-by-step
  • Refinancing DOs and DON'Ts

Now that you’ve been in your home for a while, you may want to consider refinancing your mortgage. Whether you’re just exploring the idea or ready to start the process, this guide will help you make the right decisions for you and your family.

Start with your goals

First, it helps to start the process with a clear goal in mind. Consider the following questions to get clear on what you hope to achieve through refinancing:

  • Are you looking to shorten the term of your loan? If you have a 30-year mortgage that you want to pay off before retirement, for example, look for a 20-, 15-, or 10-year loan.
  • Do you want to save money over the life of the loan? Consider paying points to get a lower rate, especially if you plan to stay in your home for a number of years. Our smart, simple, and secure mortgage refinancing application provides customized options based on your goals. Check it out at laurelroad.com/mortgage.
  • Do you need to lower your monthly payment? You could look to refinance to a lower interest rate and/or extend the term of your loan.
  • Do you have an adjustable-rate mortgage (ARM) and are concerned about rising interest rates? You could convert your ARM to a fixed-rate loan.
  • Are you looking to get rid of private mortgage insurance (PMI)? You could refinance to reduce your loan-to value ratio (the amount you want to borrow divided by the home’s current value).
  • Do you want to cash out some of the equity you’ve built up in your home? Consider a cash-out refinance, where the new mortgage is for a larger amount than your current loan, and you get the difference in cash.

Our smart, simple, and secure mortgage refinancing application provides customized options based on your goals. Check it out at laurelroad.com/mortgage.

Understand the costs and risks

There can be fees and risks associated with refinancing. Take them into account when weighing your options, and consider the following:

  • Some mortgages have a pre-payment penalty. Don’t automatically dismiss refinancing if your current mortgage has a pre-payment penalty, but factor it in when crunching the numbers.
  • Don’t overestimate the current value of your home. The appraised value could come in lower than anticipated, which will affect the amount of equity you have in your home.
  • Mortgage loans front-load interest. For a typical 30-year mortgage, interest is front-loaded. This means during the earlier part of your mortgage term, the majority of your payments will go towards interest rather than principal. However, you may consider refinancing to a shorter term to build equity faster.
  • If you’re planning to sell your home in the near future, it may not make sense to refinance. Calculate how long it’ll take you to recover your refinancing costs and plan to stay in your home for at least that long.

Refinancing step-by-step

Follow these steps to start the refinancing process.

1. Get your current credit score and calculate your DTI.

Your credit score affects the interest rates you’ll be offered, so check your current credit report. If there are issues with your credit score, address them before talking with lenders. Your debt-to-income ratio (DTI) is the monthly minimum payments on credit cards and other loans, divided by your monthly income. The lower the number the better, and most lenders usually look for a DTI of 43% or less. Get your annual free credit report at: AnnualCreditReport.com

Debt-to-Income Calculator

Annual Income Before Taxes ? Include your total income before taxes and other deductions (like health insurance).
(including non-taxable)
$
Total Monthly Debt Payments ? Add up the minimum monthly payments you make toward debts and mortgage (or rent).
Exclude living expenses such as utility bills, food, and entertainment for more accurate results.
$

Itemize your debt

$
$
$
$
$
$
$
$
$
Itemize My Debt
Your DTI Ratio
Finance Savings

Add your information to the left to calculate.

Thumbs Up NEEDS IMPROVEMENT

Legal Scales FAIR

TrophyEXCELLENT

2. Research your home’s current value

Lenders also look at is how much equity you have in your home. Equity is determined based on the current value of the home, not the price you originally paid for it. Review real estate websites for estimates of your home’s value and recent sale prices of comparable properties in the area. You’ll likely need to get an appraisal done, but this early research helps you see where you stand.

3. Research mortgage rates

A refinance calculator will give you an idea of how much your new mortgage will cost. Look at both the monthly payment and the total cost over the full term of the mortgage. Then you’re ready to start getting quotes, but it’s important to understand how to navigate lender promotions – not all rates that are promoted may be available to you. And while there are “no closing cost” options, such programs typically roll those costs into the interest rate. While that might seem a small increase, it can add up over the life of the loan. Use our free online application to check your rates and see how much you could save: laurelroad.com/mortgage

4. Understand your all-in costs

Your lender will provide an initial loan estimate, which includes a breakdown of all the potential costs associated with your loan. A final closing disclosure will be issued three days prior to the closing

1
Loan origination fee
Loan origination fee
The fee charged by the lender for processing the new loan application.
2
Discount points
Discount points
You have the option to pay points to help you lower your interest rate. One point is usually equivalent to one percent of the loan amount.
3
Application fee
Application fee
Covers the cost for the lender to process and/or underwrite your application
4
Appraisal fee
Appraisal fee
Many refinance options require an appraisal to be conducted within a specified timeframe relative to closing.
5
Title search
Title search
The lender engages a title company to ensure there are no liens on your house.
6
Document recording
Document recording
Generally charged by the county, this covers the cost of recording the transaction for the public record.
7
Attorney review fee
Attorney review fee
Fees associated with the company or lawyer who conducts the closing.
8
Title insurance
Title insurance
Lender’s title insurance protects the lender if someone says they have a legal claim against your home and is usually required to get a mortgage loan. You can buy owner’s title insurance to protect your financial investment in your home.

5. Gather Your Paperwork

While requirements for personal and financial information can vary depending on your lender, there are some documents that you’ll probably need to provide to secure your loan. Be sure you check with your lender for any specific requirements. Here is a general checklist to get started.

  • Personal information. Your social security number and date of birth.
  • Information about your house. Homeowner’s insurance, etc.
  • Information about your current mortgage. Your current mortgage statement will provide the lender with the following information: current rate, monthly payment, outstanding balance, due date, escrows, and any mortgage insurance premiums.
  • Employment information. Names, addresses, and telephone numbers of your employers from the past two years. If you’re self-employed, you’ll need profit and loss statements and federal tax returns for the past two years.
  • Financial information. For most clients, W2s and paystubs are typically sufficient. Self-employed clients may need to provide additional documents such as personal and business tax returns. If you need funds to close or financial reserves to qualify, you may need to provide information on checking, savings, and/or other investment and retirement accounts.

Note: You are not required to provide a lender any verifying documentation until after you have received a Loan Estimate.

6. Lock in your rate

Rate locks can last anywhere from 30 to 60 days. A longer rate lock typically involves a slightly higher interest rate.

7. Get ready to close

Once your loan has been cleared to close, you will receive your Closing Disclosure. This document will provide terms and costs associated with your loan request. It will also detail your funds needed to close or the total amount of cash back you will receive after funding.

As a national lender, Laurel Road helps determined buyers work smarter by providing personalized mortgage options at real, competitive rates. Our secure technology builds mortgages online, simplifying the process with clear options, transparent fees, and human support when you need it.

To learn more and refinance your mortgage online visit laurelroad.com/mortgage

Refinancing DOs and DON’Ts

DO

  • Calculate how long it will take to recoup the fees and expenses of a refinance.
  • Anticipate how long you plan to stay in your home
  • Read all the legal documents so you understand the terms of the loan.
  • Consider paying down your principal a little. It could drop your loan-to-value ratio, saving you on the interest rate.
  • Consider paying points to get a lower rate, especially if you plan to stay in your home.

DON'T

  • Focus solely on interest rates. Consider all the costs, the APR, your monthly payment, and the total amount over the life of the loan..
  • Assume an advertised interest rate is the rate you’ll get.
  • Overestimate the value of your home.
  • Forget to plan for having cash on hand for closing costs.
  • Wait until the last minute to gather all your paperwork as that will slow the process.
  • Be afraid to talk to your lender about any questions you may have.

Was this helpful?

You May Also Like

A beautiful house

Getting a Mortgage When You Still Have Student Loa...

Read
Young woman sitting on the floor studying and working on the laptop

A Guide to Understanding Mortgages

Read
Icon depicting an online search for a new home

5 Tips to Make Applying for Your First Mortgage Ea...

Read

Don't miss the latest financial resources.

Get tailored Laurel Road resources delivered to your inbox.

    Share

    • Copy Link
    • Email
    • Social

    Social Media Share

    >

    Search Results

    0
    Laurel Road
    • About KeyBank
    • About Laurel Road
    • Leadership
    • Press
    • Refer-A-Friend
    • Apple Store
    • Google Play Store
    • Student Loan Refinancing
    • Healthcare Graduate School Loans
    • Mortgage
    • Personal Loans
    • Financial Resources
    • FAQ
    • COVID-19 Response
    • Contact Us
    • Partner With Us
    • Our Technology
    • Sitemap
    • Online Privacy Statement
    • User Agreement
    • Report Suspicious Activity

    Laurel Road is a brand of KeyBank N.A. All products are offered by KeyBank N.A. Student loans, mortgages, personal loans, and credit cards ARE NOT FDIC INSURED OR GUARANTEED. Member FDIC. NMLS #399797. Equal Housing Lender. ©2023 KeyCorp® All Rights Reserved.

    Equal Housing Lender logo FDIC Member logo

    Disclaimers

    All credit products are subject to credit approval

    IMPORTANT INFORMATION: The U.S. Department of Education recently announced a student loan debt relief plan which includes forgiveness of up to $10,000 for qualifying federal student loans and up to $20,000 for qualifying Pell Grant recipients. For more information, please read the announcement. Please note that if you refinance qualifying federal student loans with Laurel Road, you may no longer be eligible for certain benefits or programs and waive your right to future benefits or programs offered on those loans. Examples of benefits or programs you may not receive include, but are not limited to, student loan debt relief or public service loan forgiveness, repayment options such as Income Based Repayment or Pay As You Earn, or COVID-19 relief benefits such as a 0% interest rate, suspension of payments or loan forgiveness. Please carefully consider your options when refinancing federal student loans and consult StudentAid.gov for the most current information.

    Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice, legal, financial, or tax advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. Calculators do not include the fees and restrictions that certain products may have. This calculator does not indicate whether you would qualify for a Laurel Road loan. Please visit the applicable banking product pages on laurelroad.com for specific terms and conditions.

    This information provided is for informational purposes only and does not substitute consultation with a legal, tax or investment professional for important financial decisions. Laurel Road assumes no liability for loss or damage incurred by use of the information provided. Please visit laurelroad.com for full product details, terms and conditions.