With the changes in the interest rate environment, many people have considered refinancing their existing mortgages. There are usually two primary reasons for refinancing: to save cash and to change mortgage type. A homeowner or investor can save cash with lower interest payments when interest rate on the loan is decreased. Some borrowers also wish to get out of a fixed interest loan and change to a variable one. When thinking about refinancing your home, there are four easy steps to follow.

1. Evaluate if refinancing is the right step for you. Each case is unique, so make sure you explore all options. Bottom line, you should be able to say that refinancing will benefit you financially. When evaluating, you should not just look at the interest rate. Consider also fees associated with refinancing such as application fees, processing costs, and appraisal expenses. A thing to look out for at this point is the term: bear in mind that a longer term can mean higher total interest payment. As much as possible, consider a term similar to what is left in your original mortgage. If you will come out ahead after considering all possible costs and expenses, move on to the next step.
2. Research what is available in the market and choose a mortgage lender. You can do this by either contacting a mortgage broker or taking on the direct approach of doing it on your own. Having a mortgage broker will let you save time as brokers typically deal with hundreds of mortgage lenders. If you wish to go about this step on your own, start by asking lenders in your area. You can also ask others for their experiences and feedback. Another great resource is to look online. After you have done your research, choose a mortgage lender you are most comfortable with and one who offers a competitive program.
3. Apply for a loan. Here, you need to have all the required documents and information ready. The lender will use these to verify your credit worthiness, as well as perform valuation on the property.
4. Loan Approval. Upon approval of the loan, you will have to sign several documents. These will be reviewed by the bank and if everything is in place, the loan proceeds will then be used by the new mortgage lender to pay off the original loan.

There is also the option of a mortgage modification for homeowners on the brink of a foreclosure due to financial hardship. They can avail themselves of a remedy under the government's Home Affordable Modification Program, also known as HAMP. Under this legislation, mortgage lenders are required to carefully determine whether foreclosure will be financially beneficial or if the mortgage can still be modified in a uniform fashion in order to avoid default. Explore all options and think things through before refinancing.