There are many reasons to refinance mortgages. Borrowers often refinance when interest rates drop. As little as one-quarter percent decrease can save homeowner’s thousands of dollars over time. Refinancing provides cash back which can be used to pay off credit card debt, student loans, home improvements, financial investments or vacation.Borrowers who refinance mortgages pay off their original home loan by taking out a new loan. Homeowners can obtain refinancing through their current lender or shop around for the best home mortgage rates.Borrowers with FICO scores of 750 or higher have the benefit of obtaining financing from nearly any lending institution. Borrowers with less than perfect credit may find it challenging to refinance through conventional lenders.Qualifying factors for home loan refinancing include employment history, financial ability to repay the home loan, appraised property value, and debt-to-income ratio.Think about other types of lending institutions when comparison shopping for mortgage companies. Credit unions and thrift institutions sometimes provide lower interest rates and are more open to refinancing mortgages for people with bad credit.Individuals who don’t have time to shop around for best refinance rates might want to use the services of a mortgage broker. It is important to work with brokers well-established within the lending industry, as they are swiftly able to locate suitable lenders.Mortgage brokers are required to be licensed in each state they conduct business. Clients must sign a contract authorizing brokers to act as their agent. Mortgage brokerage fees are charged in addition to loan application, origination, and closing settlement fees.It is a good idea to shop brokers and compare mortgage refinancing fees. The best source for locating licensed brokers in the United States is the National Association of Mortgage Brokers at namb.org.Homeowners should calculate all costs associated with refinanced mortgages. Most mortgage notes and trust deeds include a prepayment clause and assess penalties when loans are paid off early. In most cases, closing costs will be assessed on the new loan.The initial expense of mortgage refinancing can be recovered over time through reduced monthly payments. While settlement costs can be $4,000 or more, refinancing could save homeowners $40,000 over the term of the note.Individuals who need help understanding the advantages and disadvantages of mortgage refinance should consult with lenders, brokers, credit counselors or housing counselors. The Department of Housing and Urban Development (HUD) provides a nationwide list of housing counselors at hud.gov.Homeowners with FHA loans might qualify for the Streamline Refinance program. Borrowers who qualify under the Federal Housing Administration guidelines can refinance mortgages without undergoing the credit qualification process.