Mortgage refinance
A refinance replaces your current mortgage with a new one. People refinance to lower their rate or payment, change their loan term, remove mortgage insurance, or take cash out of their equity. It only makes sense when the benefit is worth the closing costs, so here's how to tell.
See your refinance options
Answer a few quick questions and see which loans fit. A licensed loan officer confirms your options.
Refinance options
When refinancing makes sense
Refinancing has costs: an appraisal, title, lender fees and other closing costs, all listed on the Loan Estimate you get after you apply. So the question is whether what you gain outweighs what you pay.
The simplest test is your break-even point: divide your total closing costs by how much you save each month. If closing costs are $6,000 and your payment drops by $250 a month, you break even in 24 months. If you plan to keep the home and the loan longer than that, the refinance may be worth it. Our refinance calculator does this math and also compares total interest.
Lower your rate or monthly payment
A rate-and-term refinance replaces your loan without taking cash out. If rates have dropped since you bought, or your credit has improved, a lower rate can reduce your payment and the interest you pay over time.
Watch the term. Restarting a 30-year loan can lower your payment while adding years of interest. Comparing the total cost, not just the payment, shows the real picture.
Change your loan term
Moving from a 30-year to a 15-year loan usually raises the monthly payment but can save a large amount of interest and build equity faster. Going the other way can free up monthly cash flow. You can also move from an adjustable-rate loan to a fixed rate if you want a payment that won't change.
Remove mortgage insurance
On a conventional loan, private mortgage insurance can usually be cancelled once you reach enough equity, without refinancing. Ask your servicer first.
FHA is different. On many FHA loans, the annual mortgage insurance premium lasts for the life of the loan unless you put at least 10 percent down. If your home has gained value, refinancing from FHA into a conventional loan with at least 20 percent equity can remove mortgage insurance entirely.
Streamlined refinances for FHA and VA loans
If you already have an FHA loan, an FHA Streamline Refinance can lower your rate with reduced paperwork. VA borrowers can use the VA's Interest Rate Reduction Refinance Loan (IRRRL) to refinance an existing VA loan. Both have their own eligibility rules, and a loan officer can confirm whether you qualify.
Refinancing to take cash out
A cash-out refinance replaces your loan with a larger one and pays you the difference. For a primary home, conventional and FHA cash-out refinances generally let you borrow up to 80 percent of the home's value. See home equity options to compare a cash-out refinance with a HELOC or home equity loan.
Common questions
How soon can I refinance after buying?
It depends on the loan. Some refinances can happen soon after closing, while others, especially cash-out refinances, require that you've owned the home or had the loan for a set period. A loan officer can check the rules for your loan.
Does refinancing cost money?
Yes. Refinancing has closing costs, such as appraisal, title and lender fees. Some lenders offer to roll costs into the loan or into a slightly higher rate. Your Loan Estimate lists every cost so you can compare offers.
Will refinancing restart my loan?
A refinance creates a new loan with a new term. You can often choose a shorter term so you don't add years to your payoff date.
Can I refinance a rental property?
Yes. Conventional loans can refinance investment properties, and DSCR loans qualify a rental on its rent instead of your personal income.