Refinance in Massachusetts

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Contributor, Benzinga
June 10, 2020

Do you wish you could change your monthly mortgage payment, insurance expenses or use some of the equity you’ve built in your home to pay off debt? You can! 

It’s simple to apply for a refinance in Massachusetts. Start with our guide to learn what to expect and find the best refinance mortgage companies in the Bay State. 

Refinance Calculator

Best Refinance Lenders in Massachusetts

What’s the best mortgage company in Massachusetts for a refinance? The answer depends on your needs. If you don’t already have a lender in mind, consider a few of our favorite options below.  

Current Massachusetts Refinance Rates

When you refinance a mortgage loan, your interest rate will usually change to fit with current market rates. The best mortgage loan has the lowest possible interest rate. Take time to research loan options and secure the most affordable rate to save a significant amount of money by the time you finish paying off your home loan.

Does your interest rate really make a big difference in your mortgage payment? Let’s take a look at an example to illustrate the importance of a low interest option when you refinance.

Imagine that you’re refinancing a $150,000 loan with a 30-year term and a 3.5% interest rate. By the time you finish making payments on your loan, you will have paid your lender a total of $92,484.15 in interest. 

If you take the exact same loan with a 4% interest rate, your total interest paid will be equal to $107,804.26. A refinance with an interest rate just half a percentage point lower means saving well over $15,000 over the life of your loan.

Below you can view a chart of current sample refinance rates in Massachusetts. We update this data on a regular basis to ensure you have the most up-to-date information available.  

Loan TypeRateAPR
30-year fixed 7.278% 7.728%
15-year fixed 6.538% 6.932%
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) 7.812% 8.614%
Rates based on a loan amount of $200,000 and property value of $225,000.
See more mortgage rates on Zillow

Refinance Process

Though a refinance might seem intimidating, the truth is most homeowners consider the refinance process simpler than applying for their 1st loan. Begin by getting an idea of what you want from your refinance loan. Some goals for a refinance include:

  • A lower monthly payment
  • Securing a lower market interest rate
  • New loan type
  • Using home equity for cash through a “cash-out refinance”

After you decide what you’d like to get from your refinance, it’s time to choose a lender. Every lender offers its own points of strength. Some qualities you might want to consider include:

  • Availability of loan types. Not every lender offers every type of loan. The best place to refinance a mortgage loan won’t be the same for everyone because every lender in Massachusetts offers a unique set of loans. Know your loan type and explore all of your options before you begin comparing lenders.
  • Refinance process. Do you prefer a lender with a streamlined application process like the Quicken Loans® Rocket Mortgage® platform? Do you value fast closings above everything else? Would you like the convenience of an online mortgage? Or do you value local branches and the ability to apply in person? These are all questions that you should ask yourself before you choose a lender.
  • Current rates and fees. Locking into the lowest rate possible can make your refinance much more affordable. Be sure to compare a few competing lender rates and fees before you apply toe ensure a good deal.

After you choose which lender you want to work with, apply for your new loan using your lender’s process. Just like your original mortgage loan, the lender will ask you for documentation to prove your income and assets. The specific paperwork you’ll need to provide may vary by lender, but prepare the following:

  • Your last 2 W-2s
  • Your last 2 bank statements
  • Your last 2 pay stubs

Once you’re approved for your refinance, your lender will begin the underwriting process. In most circumstances, your lender will schedule a new appraisal before you close on your refinance. When you bought your home, you probably didn’t attend your appraisal. However, now that you own your home, you’re free to attend your appraisal and take steps to ensure a high home estimate. Some steps you might want to take include:

  • Recording your upgrades. If you’ve made permanent upgrades to your home, it can be helpful to prepare a list and provide it to your appraiser when they arrive. It can be hard to spot a new dishwasher or renovated staircase if you aren’t looking for it.
  • Tidy up. The cleanliness of your home won’t play a role in your home value. However, cleaning up before your appraisal makes it easier for your appraiser to assess the true condition of your property.
  • Complete small repairs. You shouldn’t undertake a major renovation project for the sake of an appraisal. However, if you have minor repairs that you’ve been putting off, be sure they’re finished before your appraisal.

After your underwriting and appraisal close, your lender will schedule your closing meeting. At closing, you’ll sign on your new loan and ask any last minute questions for your lender. After you leave closing, your refinance is officially complete. 

When Should You Refinance in Massachusetts?

Refinancing can accomplish a number of goals if you aren’t satisfied with your home loan. Some of the reasons to refinance include:

  • Lower interest rates. If rates are lower now when they were when you got your loan, you may qualify for a lower APR through a refinance.
  • Get rid of your FHA insurance. If you have at least 20% equity in your home, you can get rid of FHA insurance payments by refinancing into a conventional loan.
  • Lower your monthly payments. Having trouble covering your monthly mortgage payment each month? Refinancing to a longer term lowers what you owe each month.
  • Take cash out of your equity. If you need to pay off credit card debt or fund a renovation project, you might want to consider taking cash out of your built equity. A cash-out refinance is a unique type of refinance that allows you to accept a higher principal loan balance in exchange for a percentage of your equity in cash. For example, if you have a loan balance of $100,000 and you need $5,000 in cash, taking a cash-out refinance would leave you with a loan worth $105,000. Your lender would then give you $5,000 in cash after you close. 

When Should You Not Refinance?

There are also a few situations when refinancing doesn’t make sense.

  • You plan on moving out of your home soon. The longer you live in your home, the more monetary value you’ll see from your refinance. If you plan on moving out of your home in the next few years, you might end up losing money by refinancing once you factor in closing costs.
  • You can’t cover closing costs. Closing costs on refinances are almost always less expensive than getting a new loan — but they can still equal thousands of dollars. Though some lenders may allow you to roll your closing costs into your loan balance, you’ll need to accept a higher interest rate to do so. When you consider long-term costs, it’s almost always better to wait until you can pay for your closing costs upfront.
  • You don’t have 20% equity in your home and you want a conventional loan. You need 20% equity in your home before you refinance an FHA loan into a conventional loan. This is because if you have less than 20% equity, your lender will require you to buy private mortgage insurance (PMI) instead of FHA insurance. PMI is more expensive than monthly FHA insurance — so don’t rush to convert your loan if you don’t have the equity.   

Bad Credit Refinance

One of the 1st things your lender will ask you when you refinance your loan is your credit score. Your credit score is a representation of you as a borrower. If you have a lower score, you might not be able to refinance because lenders see you as too risky a candidate for a new mortgage. However, there are a few options you can use to refinance now if you have a low score.    

If you have an FHA loan, consider applying for an FHA streamline refinance. FHA streamline refinances allow you to refinance without a new appraisal or credit check, so homeowners with low scores can still qualify. You must meet all the following criteria before you can get an FHA streamline refinance:

  • You must already have an FHA loan
  • Your monthly payment cannot increase by more than $50 after your refinance
  • You must have made your last 12 monthly mortgage payments on-time
  • You must be refinancing your rate or term only (no cash-out refinances)

The VA loan version of a streamline refinance is called the VA interest rate reduction refinance loan (VA IRRRL). Like an FHA streamline, you can get a VA IRRRL without income or credit verification or a new appraisal. You must meet all the following criteria to get a VA IRRRL:

  • You already have a VA loan
  • There are at least 270 days between the date you closed on your VA loan and the date you refinance
  • You must have made your last 6 consecutive mortgage payments on-time
  • You can only refinance your rate or term

If you don’t have a government-backed mortgage loan, you might want to consider adding a non-occupying co-client to your loan. A non-occupying co-client is someone who doesn’t live in your home but who agrees to pay your mortgage if you default. Having a co-client on your refinance can make you a safer candidate in the eyes of lenders — but remember that your co-client will be legally responsible for your loan if you don’t pay. 

Where Should I Refinance?

If you still aren’t sure where to begin your refinance, we recommend checking out Figure. Figure is a mortgage refinancing company offering 100% online refinances backed by the power of blockchain technology. Figure specializes in easy, beginner-friendly applications, quick closings and fast access to customer service. If you’re feeling overwhelmed by the refinancing process, Figure could make it less stressful.  

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.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.