Second, if you refinance and end up with a lower monthly payment than you're now making, the temptation will be to take the savings and spend it elsewhere. Don't do it! Instead, send in the same amount using two checks. One check will be for the new monthly payment; the other can be applied to pre-paying principal and hastening the day when you own your home free and clear. Be sure to include a note explaining that the extra payment is to be applied to the principal balance.
Other things to keep in mind:


  • You can refinance with the original lender or go to a new one.
  • Find out when the rate on your loan will be "locked in" (permanently set). Is it when you apply? When the loan is closed? Many borrowers have been hurt when interest rates rose after the original proposal was made but before the lender locked in the rate.
  • Get a commitment in writing of the exact terms of the mortgage being offered and how long the offer is good for. It should include the circumstances under which the lender would be allowed to back out (for example, in case of a dispute over the appraised value of your home).
  • Check with your loan officer or processor to find out when the appraisal and credit agency reports are due back. Call on the expected dates to see if everything checks out.