A family member is thinking about refinancing their home. The idea is to take advantage of low rates to get a lower interest rate loan, ideally with a longer term (current mortgage is 15yr I believe), and maybe refinance part of the equity they already have accumulated on the house. The house is in a desirable part of a town that has not been touched too much by the bubble burst, so it is probably worth quite a bit more than the amount still owed on the mortgage (to be confirmed, of course).
So for example, if the home is worth 100, and the mortgage is still for 50, they might want to try to refinance for 80.
They asked me to look into that, and although I can probably run the financial calcs, I'm completely ignorant of the practical aspects of refinancing one's loan.
So here are my questions:
- Who refinances loans? Banks, credit unions,...? What are the pros of going with one or another?
- What are the key steps in refinancing a mortgage?
- Is there anything in particular that I should look out for?