Home Loan Refinancing FAQs
Take charge of your loan and learn the benefits of refinancing your mortgage through Simmons Bank.
There are four benefits of refinancing:
- Lower your interest rate.
- Reduce your monthly payments.
- Pay off your current mortgage quicker.
- Use the equity in your house.
Most lenders require you have between 5-10% of equity in your home before attempting to refinance. Simmons Bank requires that the loan to value (LTV) ratio not exceed 95%. This means that the amount of the new loan must be equal to or less than 95% of the current appraised value.
To help lock-in the interest rate you want, fill out a mortgage loan pre-qualification application online. The interest rate you are quoted on the day your mortgage loan application is accepted is the rate you can lock-in to, if you choose to do so. You are only able to lock-in your interest rate for a certain amount of time called the lock period. One of our friendly mortgage loan advisors will gladly go over your loan application with you to make sure you have considered all of your financing possibilities and to discuss the lock-in rate and period.
Closing on a refinanced mortgage is completed the same as closing on a first mortgage. On the closing date, you will read and sign all of the closing documents and pay the closing costs.
To discover how much you can afford to spend on your new house, you will need to see how much you can afford to pay each month toward a mortgage loan.
In general, lenders prefer that your monthly mortgage payment is about 30% or less of your gross monthly income. Lenders also look at your back end ratio (debt in comparison to income).
When you look at refinancing, you will need to consider whether the money you save will outweigh the fees you will pay to refinance. If a prepayment penalty is included in your current mortgage, you will want to take the fee associated with prepayment into consideration in your refinancing decision. Before you refinance, check your current mortgage loan papers for any prepayment penalties.
Yes. An appraisal is used to help determine how much equity you have in your home and the amount for which you can refinance your home.