Refinancing 101: Everything you need to know

Sage Mortgage
NMLS #1374724

Refinancing 101: Everything you need to know

Mortgage rates are at record lows, so now the perfect time to consider a refinance. Whether you're looking to lower your monthly payment, get cash to pay for things like home improvements, or want to lower the amount of interest you'll pay over the life of your mortgage, a refinance can help you achieve your financial goals.

There are a few things to consider before you make the leap, though. We're here to help you learn the ins and outs of refinancing before you make a decision. Read on to learn more about refinancing and see if it may be right for you.

How a refinance can help you

Basically, refinancing means that you take out a new mortgage and use it to pay off your existing mortgage. This can be a great idea if you're looking to get a lower interest rate, new monthly payment, or cash from the equity you already have in your home. 

The first step of the process is to figure out your reason for refinancing. 

  • Are you looking to save over the life of your loan? In that case, you should find a new mortgage with a lower interest rate. 

  • Are you looking to change your monthly payment? In return for a new interest rate or term, you can change your monthly payment so it fits better with your budget. 

  • Are you looking to take cash out of your home's equity to pay for a large expense like college or home improvements? You can use a cash-out refinance to get the funds from the equity you've built in your home. 

Compare rates to get the best option for you

Once you have your goals in mind, you can start comparing rates. With Sage, you can do this process entirely online. You'll enter some information about yourself and your finances and then see quoted rates, terms and closing costs. 

Shopping around is important at this step. Take a look at multiple lenders, and take notes on rates, closing costs and monthly payments. When you have quotes from a few companies, you can compare them side-by-side to see which one works best for you. 

If you're not totally sure on which type of loan would be best for you, our loan officers can help you examine all your offers and choose one.

Closing on your refinance

When you find an offer and choose a broker or lender that will help you the most, you'll fill out a full application, upload some documents like your W2s and photo IDs, and then be on the way to refinancing.

Documents you'll need to close

When you apply for a refinance, you'll need to show that you can afford it and that it will be beneficial to you. All mortgage lenders and brokers (including Sage) will need to look closely at your income, credit and home closely to determine your eligibility.

When you apply, you may need to show:

  • Recent paystubs 

  • Tax returns from the past two years (1040 returns with any attached schedules, W-2 forms and/or 1099 statements)

  • Credit score or Social Security Number

  • Recent bank, asset and/or profit and loss statements

  • Recent debt statements

  • Recent mortgage statements

  • Two years of employment history or a written explanation if you’ve been employed less than two years, or if there are gaps in your work history

  • Personal and business tax returns if you’re a freelancer, gig worker, independent contractor or otherwise self-employed

  • Proof of your retirement income through social security, assets or 401K’s if you're retired

    These and other factors can help determine if you're eligible and what interest rates you qualify for. The better your financials, the more likely you'll qualify for lower rates and better terms.

Think about closing costs

Just like when you completed your original mortgage, you'll need to pay closing costs for a refinance. Closing costs are charges for things like fees, lender origination and underwriting, your application, appraisal and credit checks. 

Most of the time, closing costs range between 2 and 5 percent of the amount you're borrowing. The good news: Many lenders offer "no-closing-cost" refinances, where you can add your closing costs into your loan or get a slightly higher interest rate instead of paying them upfront.

As long as you're planning to stay in your home long enough to break even (earn enough equity to balance out the costs), then this can be a good option. Again, if you're not sure, our loan officers are happy to help explain the pros and cons in more detail. 

Okay, I'm ready to refi!

The Sage Mortgage team is ready to help you! Start by filling out an application on From there, we'll run your credit and help you complete all your info so we can find your rates. You'll be assigned a dedicated loan officer who will help you through the process and answer any questions that come up. 

With Sage, most borrowers close within 28 days after applying, which is faster than the industry average of 30 to 45 days. Once you've closed, you'll be able to start paying your new mortgage, and you'll receive funds if you chose to do a cash-out refinance.

Ready to start? Fill out an application today.