Refinance in Delaware

If your financial situation has changed since you took out your mortgage loan, you may want to consider a refinance. Refinancing your loan can allow you to access lower interest rates, change your monthly payment, take cash out of your equity and more. Before you apply for a refinance in Delaware, know what to expect with our quick and easy guide. 

Best Refinance Lenders in Delaware

From Quicken Loans’ streamlined Rocket Mortgage platform to affordable conventional loans from Better.com, you have access to a diverse range of mortgage lenders in Delaware. If you aren’t sure where to begin, consider a few of the best refinance mortgage companies operating in your state. 

Current Delaware Refinance Rates

One of the best ways to save money on your mortgage loan is by locking into a low interest rate. Lowering your interest rate lowers what you pay every month — and can end up saving you thousands of dollars by the time you finish paying off your loan.

Online mortgage lenders now allow you to check on current rates in your area without committing to a refinance. Below, you can see a sample of what you might expect to pay if you refinanced today. We update this information on an ongoing basis to ensure that you have access to the most recent updates. You may want to bookmark this page and track rates over time to ensure that you’re locking into the most affordable rate possible. 

Refinance Process

When you refinance a mortgage loan, you’ll go through an abbreviated application process. Most homeowners find refinancing to be faster and more affordable when compared to getting their original mortgage loan.

The first step in the refinance process is to determine your goals. Some of the reasons why you might want to refinance include:

• Lowering your monthly payment
• Changing your loan type
• Taking cash out of your home’s equity with a cash-out refinance

After you know exactly why you want to refinance, you’ll apply for a refinance with a lender offering refinance loans in your state. The best mortgage company to handle your refinance may vary depending on where you live, the type of loan you need and your individual goals. If you aren’t satisfied with the service or rates you’ve received with your current lender, consider scheduling consultations with a few competing lenders to learn more about your options.

Applying for your refinance is very similar to applying for a mortgage loan. Your lender will ask you a few questions about your income, credit and current home loan. They may also ask you to upload documents like your most recent W-2 or bank statement to prove your income.

Within 3 days of your application, your lender will send you a document called a Loan Estimate if you’re approved for a refinance. Your Loan Estimate gives you an idea of what you can expect to pay in closing costs on your refinance and an estimation of your interest rate. Your lender will often give you the option to lock your interest rate at this time to prevent changes while they complete the underwriting process.

Most underwriting processes include 2 parts:

• Appraisal: Most refinances require that you get a new appraisal. However, during a refinance, you can be present for your appraisal. You may want to create a list of permanent upgrades you’ve made to your property before your appraiser arrives to ensure the highest value estimation possible.
• Underwriting: During underwriting, your lender will go over your financial information and double-check that everything you wrote on your application is correct. This might involve running a credit check, verifying your income and reviewing your bank statements.

After both processes close, your lender will send you a document called a Closing Disclosure. The Closing Disclosure contains details on the final terms of your new loan. Your Closing Disclosure should be very similar to your Loan Estimate. If anything has changed significantly between the 2 documents, be sure to contact your lender.

At least 3 days after you receive your Closing Disclosure, your lender will schedule a closing meeting. At your closing meeting, you’ll pay your closing costs and sign off on your new loan. Be sure to bring the following to your closing meeting:

• A government-issued photo ID (like a driver’s license or passport)
• Your Closing Disclosure
• A cashier’s check or proof of electronic funds transfer for your closing costs
• A list of key contacts for anyone involved with your refinance (for example, your lawyer and lender)

Overall, the average refinance takes between 30 and 45 days from the day you apply to the day you close on your new loan. Delays from 3rd parties (like your appraiser) may cause your refinance to take longer. 

When Should You Refinance in Delaware?

Refinancing can offer a number of benefits, especially if you’re having trouble managing your loan. Here are a few instances when refinancing makes sense.

• Interest rates are low. Refinancing to a lower interest rate saves you money every year you make payments on your loan — no matter your principal balance. If market interest rates were higher when you took out your loan, consider refinancing to a lower rate.
• You need a lower monthly payment. Medical debt, an unexpected home repair, a lost job, a new baby on the way — there are an endless number of reasons why you might not be able to continue making your monthly mortgage payment. Refinancing to a longer term lowers what you owe every month.
• You need to pay off or avoid debt. A mortgage loan offers one of the most affordable ways to borrow money. The average mortgage loan has an annual interest rate around 4%, while the average credit card has an interest rate between 15% and 27%.

If you have high-interest debt or you need to cover a major home repair or renovation, consider taking a cash-out refinance. A cash-out refinance involves accepting a loan with a higher principal balance and taking the difference out of your home equity in cash.

For example, imagine that you have $10,000 worth of credit card debt accruing interest at 15% annually. You also have a mortgage loan with a $150,000 principal balance. If you take a cash-out refinance, your mortgage lender will give you $10,000 in cash after closing to pay off your debt. You’d then sign off and begin making payments on a loan worth $160,000 with your lender. 

When Should You Not Refinance?

Even if you’re working with one of the best places to refinance a mortgage loan and you know exactly what you need, a refinance might not be the best option for you. Let’s take a look at a few situations when refinancing doesn’t make sense.

• You can’t afford your closing costs. Closing costs on a refinance loan typically range between 2% and 3% of your principal loan balance. Though some lenders may offer you the chance to roll your closing costs into your loan balance, this option comes with a higher interest rate and usually ends up costing you significantly more money over time. If you can’t currently afford your closing costs, you might want to hold off on refinancing.
• You plan to move soon. The longer you have your loan, the more benefits you’ll gain from refinancing. If you plan on selling in the next few years, you might end up paying more in closing costs than you regain from a lower interest rate or dropped FHA insurance.
• You’re planning on using your cash for something besides debt. Unlike other types of loans (like student loans or auto loans) you can use the money from a cash-out refinance for anything you want. There’s nothing legally stopping you from taking $15,000 out of your home equity to go on that dream vacation to Bali.

However, taking money out of your home equity for luxuries isn’t recommended because you must pay back what you borrow in your cash-out refinance with interest. Though these mortgage interest rates are preferable to the sky-high rates that come with credit card debt, taking a cash-out refinance still puts you further away from owning your home in full. View cash-out refinances as a last resort to tackle debt — not a source of free money. 

Bad Credit Refinance

One of the first things that lenders will look at when you apply for a refinance is your credit score. Your credit score is a 3-digit number that represents how well you manage debt. If you have a high credit score, you’re much more likely to make your loan payments on schedule and only borrow what you can afford. If you have a lower score, you’re seen as a riskier candidate for a loan — and you might have trouble getting the refinance you need.

If your credit score is below 620 points, there are a few methods you can use to refinance. If you have a VA loan or an FHA loan, consider a streamline refinance (FHA) or a VA interest rate reduction refinance loan (VA). Both the streamline and the VA IRRRL options allow you to refinance your loan’s rate or term without a credit check or new appraisal. To qualify for an abbreviated refinance, you must already have an FHA or VA loan and a history of making your payments on time. You must also only be refinancing your rate or term — if you want to take cash out of your loan, you’ll need to meet minimum credit requirements.

If you don’t have a government-backed mortgage loan, consider refinancing with a non-occupying co-client. As the name suggests, a non-occupying co-client is someone who doesn’t live in your home but who agrees to make your loan payments if you fail to do so. If you know someone with great credit who’s willing to take financial responsibility for your loan, consider asking them to sign on as a co-client for your refinance. 

Should You Refinance Your Loan?

So, should you refinance your mortgage loan? If you still aren’t sure, request a mortgage loan from your current lender and assess your needs. Know how much money you’ll need to cover your debt (if applicable), understand how much equity you currently have in your property and research how rates are changing in your area. Doing your homework before you begin the refinance process will save you time, stress and money.