Contributor, Benzinga
June 15, 2020

If your mortgage loan isn’t working out for you, you may want to consider applying for a mortgage refinance. A refinance can allow you to unlock a lower monthly payment, take on a lower interest rate or take money out of your home’s equity. Before you begin applying for mortgage pre-approvals, use our guide to refinancing in Arizona to make the process easier.

Refinance Calculator

Best Refinance Lenders in Arizona

From Quicken Loans’ simple and streamlined Rocket Mortgage platform to special VA refinances from Veterans United that allow you to close sooner, borrowers in Arizona have a wide range of refinance lenders. If you don’t already know where you want to get your new loan from, consider a few of our favorite lenders below. 

Current Arizona Refinance Rates

When you refinance a mortgage loan, you’ll receive an interest rate in line with current market rates. If you took out your original loan when rates were high, this might mean that you can save money when you refinance to a lower rate. However, if rates are now higher than they were when you took your loan, you could end up paying more.

Online mortgage companies have made it easier than ever before to track how rates in your area are changing over time. Below, you can see a sample of what you might pay if you refinanced your loan in Arizona today. 

Loan TypeRateAPR
30-year fixed 8.625% 8.914%
15-year fixed N/A N/A
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) N/A N/A
Rates based on a loan amount of $180,000 and property value of $225,000.
See more mortgage rates on Zillow

Refinance Process

Though refinancing your loan might seem confusing at first, you can easily break down the process into a few simple steps. Most homeowners find refinancing their loan to be much easier and less expensive than getting their first mortgage.

Before you apply for a refinance, you’ll need to choose which lender you want to work with. There’s no rule that says you must work with the same lender who gave you your original loan. If you’re unsatisfied with your current lender or your current lender has higher-than-average interest rates, you might want to switch to a new lender.

Where is the best place to refinance a mortgage in Arizona? The answer will depend on your specific needs. Some questions you might want to ask potential lenders include:

  • What are your current rates and fees for refinances?
  • What types of loans do you offer?
  • Can I complete the refinance process online or will I need to visit a physical branch to complete my application?
  • How long will it take to refinance my mortgage loan?

After you find the best mortgage company for you, you’ll submit an application to your lender through its specified process. Most lenders now allow you to apply for a preapproval completely online, but you might have the option to apply in-person if you choose a local lender.

When you submit your application, your lender will ask for a few documents to prove your income. Your lender will probably ask you to provide your last:

  • 2 W-2 forms
  • 2 months of bank statements
  • 2 pay stubs

If you’re self-employed, you might need to provide your full tax return or a profit-and-loss statement to prove that you have a consistent income.

After you apply for your refinance, your lender will begin the underwriting process. Most underwriting processes for refinances include 2 parts:

  • Appraisal: In most cases, you’ll need to get a new appraisal before you can refinance your loan. However, unlike when you took out your mortgage loan, you can attend your appraisal when you refinance because you own the home. Don’t be afraid to draw your appraiser’s attention to upgrades or improvements you’ve made in your home to ensure the highest possible valuation.
  • Underwriting: During underwriting, your lender will go over your financial documentation and prepare your new loan. Usually, this process takes place entirely behind the scenes.

After both steps close, your lender will issue you a Closing Disclosure with the final terms of your loan. Acknowledge that you’ve received the Closing Disclosure with your lender and read through it to make sure that there have been no unexpected changes in your interest rate, loan balance or closing expenses.

The last step in the refinance process is the closing meeting. Your lender will schedule your closing meeting, where you’ll sign on your new loan and pay your closing costs. After you walk away from closing, you’ll begin managing your new loan. 

When Should You Refinance in Arizona?

Why would a homeowner want to refinance his or her mortgage loan? Refinancing can offer you a few benefits, including:

  • Change your loan’s term. If you’re having trouble paying your mortgage loan payment every month, you might want to consider refinancing to a longer term. When you increase your loan’s term, you give yourself more time to pay off your principal balance. This decreases your monthly payment.

If you have more money coming in each month, you can also refinance to a shorter term. Refinancing to a shorter term raises your monthly payment but also allows you to pay less in interest over time. Refinancing to a shorter term might also allow you to access a lower interest rate.

  • Change your interest rate. Did you lock into your mortgage loan when market interest rates were high? If rates have fallen since you got your loan, you might be able to save money by refinancing to take advantage of lower market rates.
  • Take cash out of your home equity. A cash-out refinance is a unique type of refinance that allows you to pull cash out of your home’s built equity. Many homeowners take a cash-out refinance when they need to pay off high-interest debt, as mortgage loan interest rates are significantly lower than credit card interest rates. 

When Should You Not Refinance?

Even if you’re working with one of the best refinance mortgage companies, refinancing isn’t beneficial in every circumstance. Some situations when you might want to hold off on refinancing include the following.

  • You’ve only lived in your home for a few years. There’s no legal limit on the number of times you can refinance and you can often refinance your rate or term shortly after closing on your original loan. However, in the first few years of your loan, you build equity very slowly because the majority of your payment goes toward your accumulated interest. If your loan is new, you might not be able to take equity out of your property.
  • You plan to move soon. When you close on your refinance, you’ll need to pay for closing costs. Though closing costs on refinances are usually less expensive than closing costs on new mortgage originations, they can still equal thousands of dollars. If you plan to sell your home in the near future, the amount you pay in closing costs may cancel out anything you end up saving in interest.
  • Interest rates are higher now than they were when you got your loan. If interest rates are higher now than they were when you got your loan, you could end up with a loan that’s more expensive than your current mortgage after refinancing. Just a small increase in annual interest can mean thousands of extra dollars paid to your lender by the time your loan matures — so be sure to consider current market rates before you apply to refinance. 

Bad Credit Refinance

Your credit score plays an important role when it comes to refinancing your mortgage loan. If you have a score below 620 points, you might have a harder time finding a lender willing to service your refinance. However, there are a few options you can use to refinance while you’re working on building your credit.

If you have a VA loan or an FHA loan, you may want to consider a streamline refinance. Streamline refinances allow you to refinance your loan’s rate or term without an appraisal or credit check. If you have a history of timely payments and you’re refinancing to lower your monthly payment, you may qualify for a streamline refinance even with poor credit.

If you don’t have a VA or FHA loan, you might be able to refinance by adding a non-occupying co-client to your loan refinance. A non-occupying co-client is someone who doesn’t live in your home but who agrees to make your mortgage payments if you fall behind on your loan. Adding a non-occupying co-client to your loan makes you a more appealing candidate because it gives the lender another layer of protection to get their money back if you default. Of course, your non-occupying co-client must first agree to lend their credit to you — and to take financial responsibility for your loan if you fail to make your payments on time.

One important note: If you want to take a cash-out refinance, you’ll always need to meet minimum credit requirements. If you have a low credit score and you need to take cash out of your equity, focus on building up your score by making timely payments and limiting credit usage before you apply. 

Will an Arizona Refinance Help You?

So, should you refinance your mortgage loan? If you need a lower monthly payment or to take cash out of your property, a refinance might be right for you. But don’t jump into a refinance without doing your research. Like a new mortgage loan, a refinance can be a commitment that lasts up to 30 years. Don’t be afraid to speak to multiple mortgage lenders and track interest rates over time before you apply.  

Get Ready for Take Off

Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.

You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.