Mortgage Basics

Refinancing Step by Step

A comprehensive guide to refinancing step by step from NMHL mortgage experts.

NMHL Editorial Team2026-02-188 min read

<p>Refinancing involves replacing your existing mortgage with a new loan, typically with a lower interest rate, lower monthly payments, or a shorter loan term. There are several types of refinance loans, including <strong>cash-out refinance</strong>, <strong>rate-and-term refinance</strong>, and <strong>streamline refinance</strong>. Each type of loan has its own benefits and drawbacks, and the right choice for you will depend on your individual circumstances and goals.</p><p>For example, if you're looking to tap into your home's equity to fund a home improvement project or pay off high-interest debt, a <strong>cash-out refinance</strong> may be a good option. On the other hand, if you're looking to lower your monthly payments or switch from an adjustable-rate to a fixed-rate loan, a <strong>rate-and-term refinance</strong> may be a better choice.</p>

<p>The refinance application process typically involves several steps, including <strong>pre-approval</strong>, <strong>loan application</strong>, <strong>processing</strong>, and <strong>underwriting</strong>. During the pre-approval stage, you'll need to provide financial information, such as your income, credit score, and debt-to-income ratio, to determine how much you can borrow and what interest rate you'll qualify for.</p><p>Once you've been pre-approved, you'll need to submit a formal loan application, which will require additional documentation, such as pay stubs, bank statements, and tax returns. The processing stage involves reviewing and verifying the information you've provided, while the underwriting stage involves evaluating your creditworthiness and determining the terms of your loan.</p>

<p>Refinancing can involve several costs, including <strong>origination fees</strong>, <strong>closing costs</strong>, and <strong>prepayment penalties</strong>. Origination fees are typically a percentage of the loan amount and can range from 0.5% to 1.5%. Closing costs, on the other hand, can include title insurance, appraisal fees, and credit report fees, and can range from 2% to 5% of the loan amount.</p><p>Prepayment penalties are fees charged for paying off your loan early, and can be a significant cost if you plan to sell your home or refinance again in the near future. It's essential to factor these costs into your decision to refinance and to carefully review your loan terms to ensure you understand what you're getting into.</p>

<p>There are several common misconceptions about refinancing that can prevent homeowners from taking advantage of the benefits it offers. One of the most common misconceptions is that refinancing is only for homeowners with perfect credit. While it's true that having good credit can help you qualify for better interest rates and terms, it's not the only factor lenders consider.</p><p>At <strong>NMHL</strong>, we offer a range of refinance options for homeowners with less-than-perfect credit, including <strong>FHA refinance loans</strong> and <strong>VA refinance loans</strong>. We also offer <strong>non-QM refinance loans</strong> for homeowners who don't meet traditional lending requirements.</p>

<p>Refinancing can be a complex and overwhelming process, but with the right guidance and support, you can navigate it with confidence. Here are a few tips and advice to keep in mind:</p><ul><li><strong>Shop around</strong> for the best interest rates and terms. Don't be afraid to compare offers from multiple lenders to find the best deal.</li><li><strong>Consider working with a mortgage broker</strong> who can help you navigate the process and find the best loan for your needs.</li><li><strong>Don't forget to factor in the costs</strong> of refinancing, including origination fees, closing costs, and prepayment penalties.</li></ul>
Couple holding their new home key

Knowledge Is Your Greatest Asset

Our expert guides help you make informed decisions at every step of your mortgage journey

Get Pre-Approved Today

Get the Free PDF Version

Download a printable PDF with checklists, worksheets, and expert tips you can reference offline — completely free.

Trusted by Homeowners Nationwide

Real reviews from Google — see why families trust NMHL

Loading application...

Our Presence

Click on endorsed states to see our direct resources!

National Mortgage Home LoansALARAZCACOFLGAIAIDILINKSKYLAMIMNMTNCNJOHOKPASCSDTNTXWAWIWY

Frequently Asked Questions

Refinancing step by step involves replacing your existing mortgage with a new loan, typically with a lower interest rate, lower monthly payments, or a shorter loan term. The process typically involves several steps, including pre-approval, loan application, processing, and underwriting. At <strong>NMHL</strong>, we offer a range of refinance options and expert guidance to help you navigate the process with confidence.

To get started with refinancing, you'll need to contact a lender, such as <strong>NMHL</strong>, and discuss your options with a loan officer. They'll help you determine which type of refinance loan is best for you and guide you through the application process. You can also start by checking your credit score and gathering financial documents, such as pay stubs and bank statements, to prepare for the application process.

The benefits of refinancing include lower monthly payments, lower interest rates, and the ability to tap into your home's equity. Refinancing can also help you switch from an adjustable-rate to a fixed-rate loan, which can provide more stability and predictability in your monthly payments. Additionally, refinancing can help you pay off high-interest debt or fund home improvement projects.

The costs of refinancing can include origination fees, closing costs, and prepayment penalties. Origination fees are typically a percentage of the loan amount and can range from 0.5% to 1.5%. Closing costs can include title insurance, appraisal fees, and credit report fees, and can range from 2% to 5% of the loan amount. Prepayment penalties are fees charged for paying off your loan early and can be a significant cost if you plan to sell your home or refinance again in the near future.

Yes, it is possible to refinance with bad credit. At <strong>NMHL</strong>, we offer a range of refinance options for homeowners with less-than-perfect credit, including <strong>FHA refinance loans</strong> and <strong>VA refinance loans</strong>. We also offer <strong>non-QM refinance loans</strong> for homeowners who don't meet traditional lending requirements. However, keep in mind that having bad credit may limit your options and result in higher interest rates or less favorable terms.

Ready to Put This Knowledge to Work?

Connect with an NMHL mortgage expert who can help you apply what you have learned.