7 Questions to Ask Your Refi Lender

Reading Time: 4 minutes | By: Tori Russell | Published: January 31, 2024

So, you’ve decided to look into refinancing your mortgage and you’re wondering which lender to go with. With thousands of lenders operating throughout the U.S., narrowing it down to the best choice can be difficult – however, after a bit of research online as well as a thought-out plan for how you’ll utilize a refinance opportunity, most homeowners can gather up a list of a few top contenders based on customer reviews, company reputation, and typical interest rates.

Once you’ve found your top picks, you’ll dig in deep to figure out what each company has to offer, and which one will ultimately provide you with the most benefits overall. To help you make this decision, we’ve compiled a list of the top seven questions to ask a lender you’re considering refinancing with:

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  1. What types of refinances do you offer?

    There are three main refinance categories, all of which come with their own benefits:

    • Cash-out refinance: Homeowners take out a new, larger loan to replace their current mortgage. This allows them access to a large amount of cash, which may be used to pay off debt, complete home renovation projects, or pay for large expenses such as college or a wedding.
    • Cash-in refinance: With this type, homeowners pay a lump-sum into their mortgage in order to lower their monthly payments and/or increase their home equity more quickly.
    • Rate-and-term refinance: This allows homeowners an opportunity to change their loan terms and/or interest rates.

    You might already have an idea of which type you’d like to pursue, in which case you’ll want to ensure the lender you’re speaking with offers that option. If you’re not sure what you want, ask each lender what they’d recommend for your situation.

  2. What loan types do you work with?

    There are also loan subtypes to keep in mind. Say you’re trying to refinance a jumbo mortgage loan. Not all lenders will offer this as an option, and that’s the case with all types of loans. Whether you have an FHA loan, a VA loan, or a conventional loan, the type of loan your current mortgage is will dictate what refinance options are available to you.

  3. What are your interest rates right now?

    Some lenders post their daily interest rates directly on their websites, but that isn’t always the case. Remember that these rates can change daily, so you’ll want to reconfirm a lender’s given rates when you sign a contract to refinance with them. If you are looking for an adjustable-rate loan, ask about the lender’s rate caps, or the maximum rate you should expect to pay.

  4. Should I expect closing costs?

    Most refinance loans come with closing costs, but this isn’t always the case, and the amount will vary with each lender. Ask what to expect here so you can add these costs into your final calculation before choosing a company to work with. If you want to combine two questions, try asking about your potential Annual Percentage Rate (APR) – this number will factor in how much you’ll pay in both interest and fees/closing costs per year.

  5. How will my monthly payments change?

    While a lender may not be able to give you an exact answer until reviewing your loan application, they should be able to offer a monthly payment estimate should you choose to refinance with them. Consider if the number they offer is low enough to meet your financial goals, or actually an amount you can reliably pay month after month.

  6. Do I qualify?

    Get an idea of what the lender requires of applicants before offering them a loan. Most lenders take the following into consideration when reviewing applications:

    • Credit score: The higher your score, the more likely you are to qualify, particularly for a loan with notably favorable terms.
    • Your current home equity: How much have you already paid off your current mortgage? The more you’ve paid so far, the better
    • Debt-to-income ratio (DTI): Your DTI considers how much money you spend paying off debts per month versus how much money you’re able to save each month. The more you’re able to save, the better your DTI will be. Your lender should be able to explain exactly how this figure is calculated.

      • The lender you’re speaking with may have additional standards you’ll need to meet. Finding out the expectations beforehand can save you from wasting time on paperwork for a loan you know you can’t qualify for.

  7. How do I apply?

    While most refinance applications contain similarities, each lender will have their own process. Ask your lender if you can apply online, over the phone, or even in person, and ask what paperwork you’ll need on-hand to apply. Additionally, make sure to find out how long the lender typically takes to get back to applicants, and from there ask how soon you could expect to start your refinance, should you choose to go with that lender. Take some of the stress out of the process by staying well-informed and organized throughout.

You might have other questions come to mind while speaking with each lender, and we encourage you to ask those as well. Get as much information as you can before settling on a final choice – that way, your refinance will serve your needs perfectly.

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