There are a few important things to understand about refinancing and knowing them can make the process more streamlined. The key figure is your loan-to‐value ratio, which is the amount you owe on your loan compared to the value of your home. When the difference is 80 percent or less, you will have many more options. To arrive at that figure, your home will be appraised to determine its value.
The fees to refinance a loan, including the appraisal, generally total three to six percent of the mortgage balance and may sometimes be folded into that balance. You will receive a statement featuring all of these expenses, called the Closing Disclosure, at least 3 days prior to your closing date. Also, check your existing loan to see if there will be a pre-payment penalty since this can apply to refinancing the loan and is above and beyond typical settlement costs.
The mortgage environment has changed in recent years and thus requires more paperwork and closing a loan can take longer. Try to avoid making any sudden changes that will impact your credit score during this time.