Questions to Ask Lender When Refinancing Your Mortgage
Twenty-one questions to put to a lender or loan officer before you commit to refinancing, covering the rate and what it assumes, the full cost of closing, the effect on your payoff date, rate locks, escrow and the timeline. Written for homeowners comparing offers from more than one lender.
The questions
Open any question for the note
What rate can I actually get, and what does that quote assume about my credit score and equity?
Why ask it
Advertised rates assume a borrower profile that may not match yours. Asking what the quote assumes turns a headline number into a conditional one, and if the assumptions are better than your situation, the real rate will be higher than the one you were given.
Can you put this in a written Loan Estimate so I can compare it with other lenders?
Why ask it
A verbal quote cannot be compared with anything. A written estimate uses a standard format, which is the only way to line up two offers side by side, and reluctance to produce one this early is itself worth noting.
What is the total cash I would need at closing, not just your own fees?
Why ask it
Lender fees are only part of the total. Appraisal, title work, recording and prepaid items can add substantially, and a quote that only covers the lender's own charges will understate what you actually pay.
Which of these fees are yours, and which come from third parties?
Why ask it
The distinction matters because the lender's own fees are the negotiable ones, and some third-party services can be shopped separately. Asking forces the breakdown that makes both possible.
Am I paying points for this rate, and what would the rate be without them?
Why ask it
Points make a rate look lower by moving cost to closing. Seeing both versions lets you work out whether you will hold the loan long enough for the upfront payment to pay for itself, which is the only thing that makes points sensible.
If I roll the closing costs into the loan instead of paying them, what does that add over the life of the loan?
Why ask it
A no-cost refinance is usually a financed-cost refinance. The fees move into the balance and accrue interest for the whole term, and the total can be considerably more than paying them at the table.
Based on my new payment, how many months before the savings cover the costs?
Why ask it
This is the number that decides whether refinancing is worth doing, and it depends on your actual payment change rather than the rate difference. Compare it honestly against how long you plan to keep the house.
Would this put me back at the start of a new term, and what does that do to the total interest?
Why ask it
Refinancing into a fresh thirty-year term after eight years of payments returns you to the front of the amortization schedule, where most of each payment is interest. A lower monthly payment can still mean more interest paid in total.
What would the payment be if I kept roughly the same payoff date instead of starting over?
Why ask it
Shorter terms are often not offered unless asked for. Seeing the shorter-term figure alongside the standard one shows what the lower monthly payment is actually costing you in years and interest.
Is the rate fixed for the whole term, and if not, when can it change and by how much?
Why ask it
If any part of the loan adjusts, the numbers that matter are the first adjustment date, the index it follows, and the caps per adjustment and over the life of the loan. Without those four figures you cannot judge the worst case.
Will this loan require mortgage insurance, and what removes it?
Why ask it
Mortgage insurance can offset a rate improvement entirely. The important detail is how it ends: some types drop off at a set equity threshold, others stay for the life of the loan unless you refinance again.
Is there a prepayment penalty, and does the loan restrict extra principal payments?
Why ask it
You may want to pay this loan down early or refinance again if rates move. Knowing the restrictions before closing avoids discovering them at the point where they cost you money.
How long is the rate lock, what does an extension cost, and who pays if the delay is on your end?
Why ask it
Locks expire, and processing regularly runs longer than expected. Establishing in advance who absorbs the cost of an extension prevents a fee appearing late in the process when you have little leverage left.
If I lock and rates fall before closing, do you offer any way to take the lower rate?
Why ask it
Some lenders offer a one-time adjustment, some do not, and some charge for it. Asking before you lock is the only time the answer is useful, and the response tells you how the lender handles a market that moves against them.
What happens to these terms if the appraisal comes in lower than we are assuming?
Why ask it
Your rate and mortgage insurance depend on the loan-to-value ratio, which depends on the appraised value. A borderline case can be repriced late, and you want to know the fallback terms before you have paid for the appraisal.
Are you keeping this loan or selling it, and where would I be sending payments?
Why ask it
Servicing often transfers shortly after closing, which changes who handles your payments, escrow and any future hardship request. It does not change your terms, but it does change who you deal with for decades.
What happens to my existing escrow account, and should I expect a refund or a shortfall?
Why ask it
Your current escrow balance is usually refunded while the new loan collects its own reserves at closing, so cash goes out before it comes back. Knowing the rough amounts and timing prevents a surprise in the month around closing.
What do you need from me, and by what date, for this to close on schedule?
Why ask it
Most delays come from documents arriving late rather than from underwriting. A specific list with dates lets you get ahead of it, and a vague answer suggests you will be chasing this file yourself.
What is the most common reason a file like mine gets delayed or repriced?
Why ask it
An experienced loan officer will name the actual pattern for your situation: self-employment income, a title issue, a condo questionnaire, a low appraisal. That is a free warning about where your own application is most likely to stall.
If I take cash out, how do the rate and costs differ from a refinance without it?
Why ask it
Cash-out loans are usually priced higher and have tighter equity limits than a straight rate-and-term refinance. Seeing both quotes shows exactly what the borrowed cash costs, which is easy to lose sight of inside a single monthly payment.
Looking at my numbers, is there a case for not refinancing at all?
Why ask it
The person answering is paid when the loan closes, so the answer should be weighed accordingly. Still, a loan officer willing to say that your break-even is too long, or that waiting makes sense, is one worth continuing to talk to.
Comparing refinance offers
Practical guidance for the conversation itself
Before you call anyone
Find your current numbers first
Pull your existing rate, remaining balance, remaining term, monthly payment split between principal and interest, and whether you are paying mortgage insurance. Without these, you cannot tell whether an offer is an improvement.
Decide what you are trying to change
Lowering the payment, shortening the term, removing mortgage insurance, converting an adjustable rate, and taking cash out are different goals that favor different loans. Lenders will optimize for whichever one you name, so name it deliberately.
Be honest about how long you will stay
Break-even math depends entirely on this. If there is a realistic chance you move or sell within a few years, a long payback period turns a lower rate into a net loss.
Ask each lender how rate shopping affects your credit
Multiple mortgage inquiries in a short period are treated differently from unrelated credit applications, but the details depend on the scoring model in use. Ask directly rather than assuming, and keep your applications close together.
Reading two offers side by side
- Compare Loan Estimates dated within a few days of each other. Rates move, so quotes from different weeks are not comparable.
- Look at the lender's own fees and the points separately from third-party charges. That is where the differences between lenders usually sit.
- Check the loan amount on each estimate. If one has costs rolled into the balance and the other does not, the payments are not measuring the same thing.
- Compare total interest over the term as well as the monthly payment. A lower payment achieved by extending the term can cost more overall.
- Read the section listing services you can shop for, and get at least one independent quote for title work.
- Get any promise about credits, waived fees or lock extensions in writing on the estimate rather than in an email or a phone call.
While the loan is in process
- Do not open new credit accounts, change jobs, or make large unexplained deposits between application and closing. Any of these can reopen underwriting.
- Send requested documents the same day where possible. Underwriting turn times restart each time a file goes back for information.
- Keep your rate lock expiry date written down, and ask for a status update a week before it.
- Keep paying your current mortgage on schedule until the payoff is confirmed. A payment due date can fall between closing and payoff.
- Read the Closing Disclosure against your most recent Loan Estimate line by line, and ask about any increase before you sign rather than after.
- After closing, confirm the old loan shows as paid off, and check the first statement from whoever services the new loan.