Do You Have to Be Current on Your Home Loan to Apply for a Refi?

When you buy a house with a mortgage, you’re required to make monthly payments on that loan until it’s paid off. You’re locked into that interest rate for the life of the loan unless you refinance your current home loan for one with better terms. Unfortunately, most lenders require you to be current and up-to-date on your mortgage payments before they’ll even consider your application for a home refinance loan, but there are always some exceptions.

What Counts as Staying Current On Your Loan

When you make payments on time every month, your lender will consider you as being current on the loan. This means you’re making payments reliably and the bank doesn’t consider you a risk. If you fall behind on those payments, even by as little as a month, you’re no longer considered current on the loan.

If you continue to miss payments, you could end up getting a notice of delinquency which can and will impact your credit score. The lower your credit score gets, the harder it will be to get any type of loan, including a refinanced mortgage to bring your current home loan down to the current market interest rate.

What You Can Do to Not Ruin Your Chances

If you find yourself unable to pay your mortgage due to financial hardship, the first thing you should do is contact your mortgage lender. They may be able to modify your loan to help you through those financial rough patches. If they can’t, you may be able to request a forbearance on the loan which will allow you to reduce or pause your payments for a predetermined length of time.

When you communicate what’s going on with your mortgage lender, you’ll be better equipped to keep your credit score as high as possible. Remember, most lenders would rather work with you on your payments than have you fall behind and default on your current home loan.

Once You’re Ready, Refinance

If you’re making regular payments on your current home loan, you’re free to refinance it to a new, lower interest loan. Keep in mind that this new loan will replace your current mortgage and you’ll have to pay closing costs and all associated fees for the new loan. If you’re not sure if refinancing is in your best interest, contact our team to discuss your needs. We’ll help you review your options and, if you’re ready, we’ll make applying for the new loan a breeze.