Q: My question is; what is the process for refinancing your home for a lower rate and can you add on some of you existing loans on to the refinance?
A: When you refinance a mortgage you are basically taking out a whole new home loan.
The new mortgage will completely replace the old loan you got when you bought your house a year ago. So yes, ALL of the debt from your existing home loan will be converted into the new mortgage when you refinance.
However, lenders generally do not let you wrap in other debt, such as personal loans, credit card bills, etc. into your home loan.
That’s because your mortgage is a “secured” loan, and it’s backed by collateral — the house itself. If you don’t pay your mortgage, the bank can foreclose on the house and take ownership of it.
However, personal loans and credit cards are “unsecured” loans. The bank doesn’t know what you bought when you charged on your credit cards or spent money on that personal loan.
Also, those debts have nothing to do with the value of your house. So they won’t qualify to be folded into a mortgage.
The qualifications to refinance a home are essentially very similar as those for getting a first mortgage.
In terms of things you should think about, I want you to read a free excerpt from my book, Your First Home: The Smart Way to Get It and Keep It.
This information comes from the chapters in the book where I discuss what to look for in a mortgage, how to pick a lender, which loans to stay away from, questions to ask about a mortgage, as well as some do’s and don’ts of mortgage refinancing.
I hope this info helps you. Good luck!