Questions to Ask a Lender When Refinancing Your Mortgage
If you are working out what questions to ask when refinancing your mortgage, here are 55 to put to a loan officer, whether at the company you already pay or at one of several you are comparing. They run in the order the decision does: which kind of refinance fits, the rate, the closing costs, how long the savings take to cover those costs, the rate lock and appraisal, then closing day and the weeks after it. The forms and programs named, such as the Loan Estimate and FHA or VA loans, are from the United States, so elsewhere ask what the local equivalent is.
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The questions
Each question, and why to ask it
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Given what I want this refinance to do, which type of loan would you put me in, and why?
Why ask it
Lowering the payment, paying the house off sooner, dropping mortgage insurance and taking cash out each lead to a different loan. Say your goal before the lender names a product, then listen for whether the recommendation follows from it or from what they sell most.
How much equity do I need for the refinance you are describing, and what value are you assuming for my home?
Why ask it
Until an appraisal or a waiver confirms it, the quote rests on a guess at what your home is worth. Ask where the guess came from and what loan-to-value it produces, because a few percentage points either side of a threshold can change the rate or bring mortgage insurance in.
With my income and my other debts, would I qualify for this loan as it stands?
Why ask it
A refinance is usually underwritten from scratch, so having been approved for the mortgage you hold, or never having missed a payment on it, does not settle the matter. Give rough monthly income and debt figures on the first call, and mention self-employment, commission or retirement income, which lenders document differently.
Is there a way to lower my payment without a full refinance, such as recasting the loan?
Why ask it
A recast applies a lump sum to the balance and recalculates the payment at the same rate and end date, typically for a small fee. Not every loan or servicer allows it, so the company you pay now is the one to ask before you spend money on closing costs.
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.
What is the most cash I could take out, and how much equity would be left afterwards?
Why ask it
Lenders cap a cash-out loan at a share of the home's value, and the cap varies with the program and the kind of property. Ask for the figure in dollars after the old mortgage and the costs are paid, since that is the amount that reaches your account.
Would a home equity loan or line of credit get me the same money while leaving my current rate alone?
Why ask it
When the mortgage you have carries a low rate, replacing the whole balance to borrow a smaller sum can cost more than a second loan on that sum alone. A lender that offers both can price them side by side. One that only refinances has a reason not to bring it up.
I have a second mortgage or a home equity line. Can it stay in place, and what does that take?
Why ask it
A loan that stays behind the new mortgage usually needs its own lender to agree in writing to remain in second position, which is called subordination. That request can add weeks and a fee, so raise it on the first call and find out who handles the paperwork.
Is there a waiting period since I bought the house or last refinanced before you can do this loan?
Why ask it
Many loan programs want a minimum number of months or payments on the existing mortgage, and the count differs by program and by whether cash comes out. Give the date your current loan closed and have them check it against the rule for the loan they are quoting.
Does the type of loan I have now give me a simpler route, such as a streamline refinance?
Why ask it
Some government-backed loans in the United States can be refinanced within the same program with less paperwork, and sometimes with no new appraisal. Tell the lender whether your loan is FHA, VA, USDA or conventional, then ask what the shorter route requires and what it rules out.
Rate
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.
Have you pulled my credit for this quote, and if not, when will you, and is it a hard inquiry?
Why ask it
A quote built on the score you recited can move once the real report arrives. Find out which kind of pull they do and at what stage, and gather your quotes inside a short window. How several mortgage inquiries are scored is worth having each lender explain.
Can you put this in a written Loan Estimate so I can compare it with other lenders?
Why ask it
In the United States the Loan Estimate is a standard three-page form, issued once you have given the lender the basics of an application, so two of them can be read line against line. A figure given over the phone or on a lender's own worksheet cannot, and reluctance to issue the real form is worth noting.
What is the APR on this loan, and which costs does it include?
Why ask it
The APR folds certain fees into the rate, so two loans with one rate and two APRs differ in what they cost up front. It is worked out as if you kept the loan to the end, which makes it a weaker guide if you expect to sell or refinance again within a few years.
Am I paying points for this rate, and what would the rate be without them?
Why ask it
Points buy a lower rate with cash at closing. Get the rate and the cost for both versions, then divide what the points cost by what they save each month: that is how many months you would have to keep the loan before they have paid for themselves.
How close am I to a better pricing tier, on credit score or on equity?
Why ask it
Pricing tends to move in steps, so a slightly higher score or a slightly smaller loan can land in a cheaper band. If you are near a line, ask what it would take to cross it, and whether waiting a month or bringing some cash to closing would do it.
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.
Are you a broker or the lender itself, and how are you paid on this loan?
Why ask it
A broker takes your file to several lenders, while a bank or direct lender prices from its own rate sheet, and neither is cheaper as a rule. The answer tells you who actually approves the loan, and whether the pay comes from a fee you can see or is built into the rate.
Will you match or beat a written Loan Estimate from another lender?
Why ask it
Some will, and the answer costs nothing to get. Send the competing estimate exactly as issued, from the same day's pricing where you can, and check that a match keeps the fees level and does not move the saving from one line to another.
Closing costs
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 your own, and which of those will you reduce or waive?
Why ask it
Origination, processing, underwriting and application charges are set by the lender, so that is where there is room, while the appraisal, recording and similar charges are passed through from someone else. Go line by line instead of asking for a discount in general, and have each change shown on a revised Loan Estimate.
What do I pay before closing, and which of those charges do I lose if the loan does not go through?
Why ask it
An appraisal fee, a credit report fee and sometimes an application or lock deposit are collected early. Learn which are refundable, and on what conditions, before you hand over a card number: a refinance can fail at the appraisal through no fault of yours.
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
Costs added to the balance accrue interest for as long as you keep the loan, so the same fees end up costing more than they would paid at the table. Ask for the difference in dollars. A refinance advertised as having no closing costs is usually this arrangement or a higher rate, not a free one.
If you offer a credit toward closing costs, how much higher is the rate that pays for it?
Why ask it
A lender credit is paid for with a higher rate. That trade can suit someone who will move or refinance again in a few years, and it works against someone who stays put. Get the rate with the credit and without it so its price is in plain view.
Can I choose the title company, and is there a reissue rate because my last policy is fairly recent?
Why ask it
A refinance needs a new lender's title policy, and some title companies charge a lower reissue or refinance rate when an earlier policy exists. How that works varies by state and by company, so call the title company with your old policy in hand. The Loan Estimate usually lists title among the services you may shop for.
How much will you collect at closing to start the new escrow account and for prepaid interest?
Why ask it
Neither is a fee, yet together they can be a large share of the cash to close: some months of tax and insurance reserves, plus interest from closing day to the end of that month. The reserve depends on when your tax and insurance bills fall due, so ask for both figures worked out for the closing date you expect.
Can I pay my own property taxes and insurance instead of using an escrow account, and does that change the rate?
Why ask it
Whether escrow can be waived depends on the loan program, your equity and sometimes state rules, and some lenders charge a fee or a slightly higher rate for it. Going without lowers the cash due at closing, but the tax and insurance bills then arrive as large lumps that you have to be ready for.
Payback and term
Based on my new payment, how many months before the savings cover the costs?
Why ask it
Have them show the working: every closing cost, including any rolled into the balance, set against the real change in your principal and interest payment. Then hold the number of months up against how long you expect to keep the house, which only you can estimate.
How much of my monthly saving comes from the lower rate, and how much from stretching out the term?
Why ask it
A payment can fall simply because the balance is spread over more years. Have them work out principal and interest at the new rate over the years you have left today. The gap between that figure and your current payment is the saving the rate itself is giving you.
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
Left unasked, the quote is usually for a standard thirty-year term. Some lenders will write a loan for the years you have left, twenty-two for instance, and others can only offer the nearest standard term, so ask which they do and see that payment beside the thirty-year one.
If I keep making my current payment on the new loan, when would it be paid off?
Why ask it
This is the plainest way to take a lower rate without lengthening the debt: the new loan asks for less and you go on paying what you pay now. Get the payoff date on that basis, and confirm that extra principal is credited in the month it arrives.
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.
I pay mortgage insurance now. Would refinancing end it, and at what appraised value?
Why ask it
Shedding mortgage insurance can be worth more than the change in rate, and it turns on the new loan-to-value. Ask what number the appraisal has to reach. Then ask the company you pay now whether it would cancel the insurance on the existing loan, which may cost far less than a refinance.
Is there a prepayment penalty, and does the loan restrict extra principal payments?
Why ask it
Ask it about the new loan, then check the note on the mortgage you have now for the same clause, because a penalty for paying that one off early belongs in the cost of this refinance. Where one applies, get the amount and the date it stops applying.
Is there anything about this refinance I should take to a tax adviser, such as points or cash out?
Why ask it
How points and interest on a refinanced or cash-out mortgage are treated for tax depends on your country, on what the money is spent on and on your own return. A loan officer can say which year-end forms you will receive, but the rules themselves are a question for an adviser.
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.
Lock and appraisal
At what point is my rate locked, and will you send the lock confirmation in writing?
Why ask it
A quoted rate is not a locked rate. Find out what has to happen before the lock is placed (an application, a credit pull, your say-so), and get a confirmation that shows the rate, the points and the day the lock runs out.
How long are refinances taking you at the moment, from application to funding?
Why ask it
Turn times stretch when rates drop and every homeowner calls in the same month. A figure from this month, not from the brochure, tells you whether the lock you were offered is long enough to reach the finish.
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
Lenders call this a float-down: some include one, some charge for it and some do not offer it at all. Ask before you lock, and get the trigger in writing, since it may only apply once rates have fallen by a set amount.
Once I am locked, what could still change my rate or my costs?
Why ask it
A lock holds the price of the loan as it was described. A lower appraisal, a credit score that has moved, a different loan amount or a property type that was recorded wrongly can each reprice it. Hearing the list tells you which surprises are yours to prevent.
Can the appraisal be waived on this loan, and what is the fee if it cannot?
Why ask it
Some refinances are approved on an automated value with no appraiser visiting, which saves the fee and the wait for a visit. Whether yours qualifies depends on the program and your equity, and the lender only finds out by running the file, so ask them to run it early.
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.
Can a low appraisal be challenged, and how long does that review take?
Why ask it
Lenders have a procedure for disputing a value, usually built on comparable sales the appraiser left out or on factual errors in the report. Ask what you would have to supply and whether your lock would outlast the wait, since a review that ends after the lock does can cost more than it wins.
Closing and after
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.
What should I avoid doing with my job, my credit and my bank accounts until this closes?
Why ask it
Lenders commonly look at credit and employment again shortly before closing. Ask what they recheck and when, and mention anything already planned, such as a car purchase, a change of employer or a large transfer between accounts, so it can be documented ahead of time.
Where and how will I sign, and can it be done remotely?
Why ask it
The choices run from the title company's office to a notary at your kitchen table to an online signing, and what is allowed depends on the state and the lender. Check as well whether everyone on the title has to sign, including a spouse who is not on the loan.
After I sign, is there a waiting period before the loan funds, and can I cancel during it?
Why ask it
In the United States, many refinances of the home you live in come with a right to cancel for a few days after signing, and no money moves until that has passed. Ask whether it applies to your loan, the exact date it ends and how a cancellation would have to be delivered.
Do I make the next payment on my old loan, and how is the payoff amount worked out?
Why ask it
The payoff includes interest up to the day the old lender receives the money, so it is higher than the balance on your last statement. Ask whether a payment falling due around closing should still go out. Skipping one on a guess risks a late mark, while an overpayment is normally refunded.
When is my first payment on the new loan due, and where does it go?
Why ask it
The first due date often falls more than a month after closing, which can feel like a skipped payment. It is no saving: the interest for that gap is collected at closing or sits inside the payoff. Have the date and the payee in writing before you cancel the old automatic payment.
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.
How will I know the old loan was paid off and its lien released?
Why ask it
Ask who sends the payoff, when the old lender should confirm a zero balance and how the release gets into the county records. Keep the payoff letter, because it is the paper you will want if the old mortgage ever turns up as open on a credit report.
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. A file that goes back for information usually waits its turn again.
- 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.