Thinking of Refinancing?

If you’re thinking about refinancing, this guide will walk you through how it works, when it makes sense, and what options may be available to you.

What Is Mortgage Refinancing?

Mortgage refinancing means replacing your current home loan with a new one. The new loan pays off your existing mortgage, and you begin making payments on the refinanced loan instead. The terms can change - such as the interest rate, monthly payment, or length of the loan.

Common Reasons Homeowners Refinance

1) Lower Your Interest Rate

If mortgage rates are lower than when you got your current loan - or if your credit profile has improved - you may be able to refinance to a lower rate. A lower interest rate can reduce your monthly payment and may lower the total interest paid over the life of the loan.

2) Reduce Your Monthly Payment

Some homeowners refinance to create more monthly breathing room. This may be done by lowering the interest rate, extending the loan term, or both (depending on your goals and qualification).

3) Tap Into Home Equity (Cash-Out Refinance)

If you have built equity in your home, a cash-out refinance may allow you to replace your mortgage with a new loan for a higher amount and receive the difference in cash at closing. Homeowners often use cash-out funds for home improvements, debt consolidation, education costs, or other major expenses.

4) Change Your Loan Term

Refinancing can help you adjust how long you’ll be paying on your mortgage. Moving to a shorter term may help you build equity faster and save on long-term interest. Moving to a longer term may lower your payment, depending on your rate and loan balance.

5) Remove Private Mortgage Insurance (PMI)

If your home value has increased or your loan balance has decreased, refinancing may help you eliminate PMI (in certain scenarios). Removing PMI can reduce your monthly payment and improve overall affordability.

6) Switch From Adjustable-Rate to Fixed-Rate

If you currently have an adjustable-rate mortgage (ARM), refinancing into a fixed-rate loan may provide more stability and predictable payments - especially if you plan to stay in the home long-term.

When Does Refinancing Make Sense?

Refinancing may be worth exploring if one or more of the following applies:

• Your current interest rate is higher than today’s available options
• Your credit score has improved since you got your mortgage
• Your monthly budget, income, or financial goals have changed
• You want to change your loan term (shorter or longer)
• You have built equity and want to access cash responsibly
• You want to eliminate PMI (when eligible)
• You plan to stay in your home long enough to benefit from the savings

Types of Refinance Options

Rate-and-Term Refinance

A rate-and-term refinance focuses on changing your interest rate, loan term, or both - without taking cash out. This is a common option for homeowners seeking a lower payment or better long-term savings.

Cash-Out Refinance

A cash-out refinance lets you convert a portion of your home equity into cash. You take out a new mortgage larger than your current balance and receive the difference (minus costs) at closing.

Streamline Refinance (For Certain Government Loans)

Some government-backed loans offer streamlined refinance options designed to reduce documentation and simplify the process for eligible borrowers. Availability and requirements depend on the loan type and the borrower’s situation.

Costs to Consider When Refinancing

Refinancing typically includes closing costs and fees, which may vary by loan type, lender, and property. Common costs may include:

• Loan origination and lender fees
• Appraisal fee (when required)
• Title and escrow charges
• Recording and other third-party fees

A key part of the refinance decision is understanding the break-even point - how long it may take for your monthly savings to offset the upfront costs.

Is Refinancing Right for You?

Refinancing can be a great tool, but it’s not always the best move for every homeowner. The right choice depends on your goals, how long you plan to keep the home, the costs involved, and the loan options you qualify for.

Talk With a Mortgage Professional

If you’re thinking about refinancing, we can help you compare options, run the numbers, and decide whether refinancing supports your financial goals.

Contact us today to explore refinance options and get a personalized quote.