Your Guide to Refinancing
If you're looking for some flexibility in your finances, a mortgage refinance might be your answer. This guide will help you understand what to consider when deciding if you should refinance.Request a Call
Establish your goals
- Take advantage of lower interest rates
- Get cash out to fund home improvements
- Move from an ARM to a fixed rate, or the other way around
Evaluate your finances
Before you refinance, consider two important factors that will impact a lender's decision to give you a home loan. The first is your credit score. This shows how well you've managed your credit history and represents the level of risk to the lender. A credit score of 700 or higher may improve your chances of getting a home loan with a lower rate.
The other factor to consider is your debt-to-income (DTI) ratio. This is the percentage of your monthly income that goes toward paying off debts. To calculate your DTI, divide your monthly debt payments by your monthly income, or use our calculator. Generally, borrowers may qualify for a mortgage if their DTI is 43% or lower, however DTI requirements may differ based on the loan you're applying for. You can bring your DTI ratio down by paying off your credit cards and reducing debt, which in turn can also improve your credit score.
Calculate your debt-to-income (DTI) ratio
Your DTI ratio20%
Determine your home equity
Calculate your home equity
Your home equity$20,000
Understand the costs of refinancing
When you refinance, you'll replace your existing mortgage with a new one. This means you'll pay some of the same costs you did when you got your original loan, such as an application fee. Since these costs will make up about 1 to 4% of your new loan amount, it's important to factor them in when you plan to refinance.Learn more about the costs of refinancing
Complete an application
As you did with your original loan, you'll need to complete a refinance mortgage application. During the refinance application process, you'll receive a loan estimate and be asked to submit supporting documents to verify your financial information.
Close on your loan
Make refinancing easier
Special pricing for Citi customers
New and existing customers may qualify for a lower interest rate or closing cost credit on a mortgage.Learn about Relationship Pricing