Mortgage Refinance – What It Is, General Requirements, and Who Qualifies
What it is:
Mortgage refinancing is the process of replacing your existing home loan with a new one—typically to get a better interest rate, change the loan term, or tap into your home’s equity. Homeowners often refinance to lower their monthly payments, switch from an adjustable-rate to a fixed-rate loan, or cash out part of their equity for other needs like renovations or debt consolidation.
General Requirements:
- A minimum credit score (usually 620+, but varies by lender and loan type)
- A stable income and employment history
- A favorable debt-to-income (DTI) ratio (generally under 43%)
- Sufficient home equity (usually at least 20% for conventional refinances)
- A completed appraisal and underwriting approval
Who Qualifies:
- Current homeowners with an existing mortgage
- Borrowers who meet the lender’s income, credit, and equity requirements
- Those who benefit financially from the refinance (lower payment, better rate, cash out, etc.)
Refinancing can be a smart financial move when done for the right reasons and at the right time.