We just refinanced and - NATURALLY - the rates have dropped since the refi a month ago. We've heard we can ask our mortgage company to 're-form' the mortgage for the lower rate. What does this typically entail? Do we have to go through the whole refi process/closing costs again?
I have never heard of a re-form. You might be able to get the mortgage company to modify your "Note". The "Note" is the recorded document gives all the terms of your loan, including your rate. ING is one company that can do this. This is because they "portfolio" all their loans. Only lenders that "portfolio" your loan might be able to do what you need.
More than likely, you will need to refinance your loan. You will have to pay some closing costs. You should be able to negotiate with your lender or broker on these fee's since you just did the loan. For example, I am a mortgage broker, and if I am refinancing someone's loan shortly after we just closed, I will waive most of my fee'sand the appraiser and escrow officer will give a reduction on some of their fee's. If you go to a bank, this negotiation will be much harder because their fee's are usually set in stone. Another thing to do is to have the fee's covered by a higher rate. This is a no fee/closing cost loan. With buying the rate, the broker or bank will get paid more and it turn, they can cover your fee's with this extra $$$.
Also consider is the lender's early payoff policy. Generally, if your payoff your loan before 3-4 months have passed, the lender will come back to the broker for any compensation that the lender gave to the broker. You should consult your broker/lender when it comes to this policy. They could negotiate something with the lender.
Finally, if you got any cashout from the last refinance, then you will need to wait at least 6 months before refinancing.
Bottom line, consult the person who you got the loan through and they should have the answers to all these items. If they don't, consult any one of us on the forum on this website.
If you received an FHA refinance you can do a Steamline refinance and you will not have to show income, asset, or an appraisal. The process is really simple and you can use the same title company so your fees will be pretty low. If you are not going to drop at least a 1 point in rate it may not be in your best interest to refinance. You should shop around, your current broker/lender may not have treated you right in the beginning.
I also have never heard of "reforming" a mortgage after it was recently refinanced. The chances are that since you just refinanced you were qualified for the loan and could prove that you can afford to make the payments at the rate you just financed under. A lender will NOT want to modify your loan if you just refinanced and proved that you can maket the payment.
You have to look at it from the lenders perspective. They lent you this money and expect to make a certain return. If everyone came back to the lender when rates dropped wanting the lower rates then the lenders wouldn't be in business for very long.
If you did get an FHA loan an FHA streamlined refinance may be a good option for you. Otherwise you would have to go through the entire process again, requlaify, and pay those lovely closing costs.