Buying a home is likely one of the largest purchases you’ll ever make. Mortgage rates have dropped recently, making it a great time for homeowners to benefit from refinancing.

Refinancing a home is one way to save on monthly expenses while also saving money long term. If you own a home, read on and find out how to refinance your mortgage!


How to Refinance Your Mortgage 

Even a small rate drop can make a big difference for saving. That is, if the closing costs do not outweigh the earned savings from the lower rates.


So to begin, make sure to figure out if the added savings do indeed add up to more of a benefit for you with the cost of closing and prepaid expenses factored in. It wouldn’t be worth it to refinance otherwise. Depending on the size of your home loan, a good rule of thumb is a 1% savings over your current rate.


In recent years, many homeowners have refinanced their mortgages. Why is now a good time for refinancing your mortgage?


“Rates are lower now than they have been in the last three  years! It’s a great time to lower your monthly payment, shorten your term, take equity out of your home to pay other expenses, or do a home improvement project.”

Kaye Mack

American Bank & Trust Mortgage Sales Manager


If the time is right for you to refinance, here’s what you’ll need to get started:

  • Your legal description
  • Proof of income
  • Proof of assets


The proof of assets is for paying the closing costs and prepaid expenses if you aren’t financing them in the new loan amount.


How Much Are Closing Costs? 

Closing costs are unavoidable with refinancing.


According to The Mortgage Reports, if a loan claims to not have closing costs, “the lender will increase your rate enough to create a lender credit that covers the closing costs. Or, they will increase your loan amount to cover those closing costs.”


Closing costs for refinancing a mortgage are less than when you purchased the home in the first place.


“A standard fee is a 1% origination fee that equals 1% of your new loan amount,” explains Kaye. “Other fees are appraisal, title insurance, credit report, etc. Depending on your loan size, your total closing cost can run 1.5% to 2% of your loan amount.”


American Bank & Trust will set up an escrow account to pay your property taxes and homeowner’s insurance. These are expenses you would need to pay regardless, so they are not considered a closing cost and are called prepaid expenses. If you have equity in your home, you can include these costs in the new mortgage amount.


Does Refinancing Hurt My Credit? 

Banks like American Bank & Trust will pull your credit score as part of the eligibility process. Typically, this step does not have any negative effect on your credit score.


If multiple lenders pull your credit, that can have some consequences. However, with refinancing this isn’t a big concern for responsible homeowners. Contact our knowledgeable mortgage bankers in advance with any questions regarding your credit rating before refinancing. We’d be happy to assist you and provide peace of mind!


Our Mortgage Bankers Can Help! 

See how much you can save on your current home with refinancing. Our financial calculator can help give you an idea of the amount you can save.


Get the expertise, flexible terms, and competitive rates to help you get you into the home you want and reach your financial goals. Count on us to make the process of refinancing  your home as stress-free as possible. Find out how to open the door to a better life with home mortgages offered at American Bank & Trust.



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