A home refinance may just be the smartest thing you can do right now to cut down on your monthly expenses. After all, many people who refinance their homes end up with significantly lower payments – often saving at least a few hundred dollars per month.

And, the home mortgage refinancing benefits do not end there. By refinancing your loan, you can also potentially stand to pay less in interest fees over the course of your loan. When you combine that with the possibility of cashing out some of your home equity in order to pay down high interest credit card debt or to pay other bills, refinancing can be a very smart move.

But, it is a good idea to have a solid understanding of just what is involved in refinancing your home before you get yourself into it.

If you are wondering, “What is involved in refinancing your home?”, here are 5 steps to refinancing:

1. You need to get a sense of where mortgage rates are right now from a historical perspective:
Before starting the refinancing mortgage application process with one or more lenders, it makes sense to do a bit of research first. Find out, for example, how current average interest rates on 30-year fixed rate mortgages look now as compared to 1, 3 and 5 years ago. If rates are at an all-time-low, this could be an ideal time for you to consider refinancing.

2. Check your FICO (credit) report:
Similarly, it is a good idea for you to check your FICO (credit) report. In particular, find out whether your current score is the same, lower or higher than it was when you took out your current home mortgage loan. If your score is higher, this is all the more reason to consider refinancing – since you may now be able to qualify for a better interest rate than you could have previously. A lower interest rate of course translates to lower monthly payments when comparing two loans with the same repayment periods (e.g., 30 years).

3. Be ready to show proof of employment and income:
Whenever you take out a loan the size of a mortgage loan, it is wise to prepare in advance any documentation you may be asked to present, such as proof of employment and income. This information, along with your credit score, will be important factors to be considered by your new lender.

4. Compare at least 3-5 home mortgage refinancing lenders:
Next, you will benefit from not just applying for a loan with one lender. Instead, apply online with or talk to at least 3-5 mortgage refinancing lenders. You may choose to include your current lender in the mix, but be sure to look elsewhere, too. You can never be sure who will offer you the very best loan terms.

5. Follow through with applying to each and every refinancing lender on your list:
Be sure to apply to each and every refinancing lender that you have in your sights. It does not make sense to give up after getting your first offer when spending just an extra hour or two could land you an even lower, money-saving interest rate.

Take these 5 steps to refinancing into account as you explore what is involved in refinancing your mortgage loan.

Author Bio: Find out how to tell whether it makes sense to refinance your home now at: Should I Refinance My Home?

Category: Finances
Keywords: What Is Involved In Refinancing Your Home,5 Steps To Refinancing your mortgage, mortgage help