Home mortgage refinance is the process of taking a mortgage on the same property which was used as collateral for another mortgage. The loan obtained on the second mortgage can be used to clear the first mortgage. This enables the borrower to convert a high-interest mortgage loan in to a low-interest loan, thus saving considerably on the monthly payment as well as overall interest.

With low interest rates, many people are refinancing their home mortgages. Refinancing is also one option to meet major expenses such as college fees or medical bills, or for debt consolidation. A person who has a previous home mortgage loan of $100,000 can take another mortgage loan of $120,000, pay off the first mortgage, and use the remaining $20,000 for meeting expenses. You can consider refinancing if the current interest rates are at least 2% less than the interest rate you are paying on the mortgage.

However, refinancing is not a very good option if you are planning to move out of the house soon, or sell the house. Also, consider the other costs involved in refinancing, such as pre-payment fees for the previous mortgage, transaction fees of the new mortgage, settlement costs, discount points and so on. Ensure that these costs are lower than the actual benefits from refinancing.

There are several home mortgage refinance brokers. It is very important to use the services of only registered brokers who have experience in refinancing. Refinancing procedures and laws are different for different states. A broker would be able to provide the right guidance for getting the best refinancing deal since he works with a number of lending sources. Services include pre-underwriting, access to a variety of lending programs, professional loan processing, redirecting the loan (if necessary), and others. There are exclusive mortgage brokerage agencies as well. Most of them have links with brokers in other states, thus enabling nationwide services.

A borrower needs to fill in a simple application form that includes the type of mortgage and terms of the loan, property information, and purpose of the loan, borrower information, employment information, assets and liabilities, monthly income and combined housing expenses, declarations, and other information for government monitoring purposes. These applications can also be done online. The Internet is a very good source for comparing home mortgage refinance loan rates.