Refinancing for a Better Loan

• If homeowners want to refinance to get a better mortgage, they should wait until market conditions are right. If interest rates have fallen, then homeowners may be able to get a lower rate than on the first mortgage. Of course, interest rates also depend on other considerations, including homeowner credit. Borrowers interested in refinancing should contact a mortgage company and ask about the current rates or terms to compare them with the original loan.
  
  

Refinancing for Cash

• Other homeowners want to refinance not for better terms but for extra cash, known as a cash-out refinance. In this type of loan, borrowers seek more than the debt of the original loan, creating an extra reserve of cash that borrowers can use for many different types of projects. In this case, borrowers should contact a mortgage company when they have built up enough equity in their houses for a cash payment. Homeowners build equity by paying down the debt in original mortgages.
  
  

Mortgage Companies

• Mortgage companies are brokers that investigate a wide number of lender offerings to find the best mortgages for their customers. Homeowners can use a mortgage broker to refinance if they do not want to go through the process of choosing a lender themselves, or if their credit will not allow them to acquire direct loans. Mortgage companies work best when homeowners want to refinance for cash. Refinance for savings can be more difficult, because mortgage brokers add their own fees to the loan cost.
  
  

Lenders

• Homeowners may also choose to pursue a direct loan by dealing with a lender. This option may be best for homeowners with good credit. Many borrowers can find the best refinance rates by contacting their original lender and pursuing a refinancing. Lenders will not have the extra fees that mortgage companies add onto the loan as part of their service charge.