Refinancing your mortgage during COVID? Look for this one lender feature

At the end of the first quarter of 2020 and throughout the rest of the year, mortgage refinancing activity surged. Even as interest rates inch up, millions of home buyers are still choosing to refinance their mortgages, despite the ongoing pandemic.

Online mortgage lenders offer the flexibility to complete all or the majority of the refinance process virtually. Refinancing your mortgage online can be safer than visiting a bank or credit union in person because of the restrictions in place due to the coronavirus, making this one lender feature the ideal choice to refinance during COVID-19.

You can explore your mortgage refinance options in minutes by visiting Credible to compare refinance rates and lenders. Check out Credible and get prequalified today.

How do I choose a refinance lender?

You can choose to work with a bank or credit union, or with a mortgage banker. Consumer finance companies, your savings account and loans are also options, although they are not as common.

Conducting your mortgage refinancing virtually during the COVID-19 crisis can save time and offers the flexibility that a traditional loan lender can’t match. When choosing to refinance your real estate mortgage, consider these tips:

Shop around: One of the best ways to find a mortgage refinance lender is to shop around. Some lenders offer only conventional loans, while other lenders may also offer government programs like FHA and VA loans. One lender may offer a lower interest rate, but charge high fees. Credible can be a big help when you’re ready to compare mortgage refinance loans.

Communicate easily: The ability to ask questions and communicate easily with your lender can also make a big difference in choosing the right lender, whether online or at a local branch office. 

Ask for a referral: Get a referral from a trusted family member or friend on how the process worked and if they were happy with their experience. 

Double-check your finances: Jot down your home value, your debt-to-income (DTI) ratio, monthly expenses and credit score; you can get credit reports and scores from the three credit reporting bureaus -- Transunion, Experian and Equifax. 

Find the best rates and terms: Some online lenders can offer better rates and terms than traditional lenders that can result in saving money. It can also be easier to qualify for a mortgage refinance with an online lender, especially if your credit is less than stellar. See prequalified refinance rates from multiple lenders, all within a few minutes. Visit Credible today to get started.

HOW TO DECIDE IF YOU SHOULD REFINANCE YOUR MORTGAGE.

Can I refinance my mortgage online?

You can refinance your mortgage virtually online. Because of COVID, it is safer than an in-person visit to a bank or credit union and can save time as you can gather the necessary financial documentation needed on your schedule. Besides, talking with multiple lenders allows you to compare offers, rates, terms and fees from the comfort of your sofa. 

HOW MORTGAGE REFINANCING HAS CHANGED AMID THE CORONAVIRUS PANDEMIC.

You begin the refinance process by submitting an application, which you'll complete online. If you have questions regarding your refinance, you can always visit Credible to get in touch with experienced loan officers and get all of your mortgage questions answered before submitting your application.

After you apply, the lender will send you information; a loan estimate, your estimated monthly payments, interest rate and more. You'll also be asked to submit the documents you gathered—pay stubs, tax returns, bank statements and W2s. 

When you’re ready to begin the process, visit Credible to view loan options across multiple lenders with fewer forms to fill out.

When should I refinance my mortgage?

Mortgage rates are inching up, but they are still hovering around 3%. 

• 30-year fixed-rate mortgage:  3.09%
• 15-year fixed-rate mortgage:  2.4%
• 5/1 year adjustable-rate mortgage: 2.79%

4 THINGS TO KNOW BEFORE REFINANCING YOUR MORTGAGE

Rates at this historical low make it a great time to think about refinancing your mortgage for these reasons:

• You can potentially get rid of private mortgage insurance.
• Get much better terms.
• You can switch to a fixed-rate mortgage from an adjustable-rate one.
• Refinance out of an FHA loan.
• Consolidate high-interest debt.
• Lower your monthly payments.
• Use your home's equity to pay for a financial emergency or finance a large purchase.

Using a refinance calculator can help you better understand just how much you could save on monthly mortgage payments through home refinancing now. Crunch the numbers and compare rates using Credible's free online tool.

What are the downsides of refinancing my mortgage?

Besides the many benefits of refinancing your mortgage, you should also consider the downsides.

It costs money to refinance: Just like when you went through the application process for your first mortgage, you will pay origination fees, application fees, title insurance and closing costs.

Recovering the costs to refinance: If you only plan to stay in your home for a short time, it may not pay to refinance. That’s because it might take up to 10 years to recoup the cost to refinance and reach your break-even point.

It can add years to owning your home free and clear: If you refinance a 30-year mortgage with another 30-year mortgage, you might see lower monthly payments, but it will delay when you can own your home free of mortgage payments. 

Adverse market fee: You may have to pay the "0.5% adverse market refinance fee" currently charged to refinances sold to Fannie Mae or Freddie Mac.  

WHO'S EXEMPT FROM THE NEW MORTGAGE REFINANCE FEE?

Despite recent upticks, interest rates are still lower year-over-year. So, if you’re thinking about a mortgage refinance, explore your mortgage refinance options in minutes by visiting Credible to compare rates and lenders, and get prequalified today.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.