Home / Refinance
Refinancing your mortgage: when it pays
Refinancing replaces your current mortgage with a new one. Done at the right time, it can lower your payment, shorten your term or turn equity into cash.
Types of refinance
- Rate-and-term: change your rate, your loan term or both.
- Cash-out: take a larger loan and receive the difference in cash.
- Streamline: simplified refinances for existing FHA loans (FHA Streamline) and VA loans (VA IRRRL), often with less paperwork.
- Remove mortgage insurance: move from an FHA loan to a conventional loan once you have enough equity.
Work out your break-even point
Refinancing has closing costs. Divide the total cost by the amount you save each month. The answer is the number of months until the refinance pays for itself.
Example: $4,000 in costs ÷ $150 saved per month = about 27 months. If you plan to stay longer than that, the refinance may make sense. These numbers are an illustration only.
Watch for
- Restarting a 30-year term can lower your payment but raise the total interest you pay.
- A cash-out refinance increases your loan balance and uses your home as collateral.
- Compare Loan Estimates from more than one lender. Fees vary.
Common questions
How soon can I refinance?
It depends on the loan type and lender. Some programs have waiting periods. A lender can confirm for your loan.
Does refinancing hurt my credit?
A credit check can lower your score slightly for a short time. Shopping several lenders within a short window is usually treated as one inquiry by scoring models.
Ready to compare options?
It takes about 2 minutes and does not affect your credit.