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Refinance Your Mortgage

Lower your monthly mortgage payment or tap into your home's equity by refinancing your current loan. Here's what it takes to make the most of your refinance.

Refinancing a mortgage can reduce your mortgage rate and lower your monthly payment. It can also leverage your home equity. The number of refinance loan applications increase when mortgage rates decrease. But while refinancing is an everyday practice, the process can be time-consuming and costly. So it’s important to understand how a refi works before applying.

What is mortgage refinancing?

Mortgage refinancing involves getting a new home loan to replace a current loan. Since you’re replacing your current mortgage, you’ll complete a new home loan application and re-qualify for the home mortgage. This means you'll need to provide your loan officer with supporting documentation. You'll also need to authorize a credit check and pay closing costs again.

When you refinance, you can receive new loan terms. Some people refinance into another 30-year mortgage, while others may choose to select a shorter term, allowing them to pay off their mortgage loan sooner.

Why should I refinance my mortgage?

Home buyers refinance for various reasons. Refinancing is often the only way to get a lower rate and a lower payment. Refinancing can also convert an adjustable-rate mortgage to a fixed-rate mortgage. Some people also refinance into a different mortgage program. They might switch from an FHA loan to a conventional home loan.

When should I refinance my mortgage?

Some experts say that you shouldn’t refinance unless the new mortgage rate is at least two percentage points less than your current rate. This is not a hard or fast rule, though.

There are no restrictions on how often you can refinance a mortgage. So when deciding whether to refinance, calculate the potential monthly savings after refinancing. From here, determine whether the savings is worth the cost. Also, consider how long you’ll live in the home. Ideally, you should live in the home long enough to recoup your mortgage refinancing costs.

Since refinancing replaces an original loan - and requires re-applying for a loan - wait until you're in a good financial situation. This involves having a strong enough credit score to qualify for a low mortgage rate. Always check your credit report before applying for a refinance.

Cost of refinancing a mortgage

Like when you got your original loan, refinancing a mortgage involves closing costs. Closing costs vary depending on location. These costs can average as much as 2% to 5% (or higher) of the mortgage balance. Closing costs are paid at closing, and may include the mortgage origination fee, title search fee, attorney fees, points, prepaid interest, and other mortgage-related costs.

Benefits of refinancing your mortgage

In addition to a lower mortgage rate, a lower monthly payment, and getting new mortgage terms, refinancing provides an opportunity to cash out some of your home equity. A cash-out refinance involves taking out a loan against the property. You can use these funds for various purposes, including home improvements, college tuition, debt consolidation, getting rid of credit card balances, and more.

Apply for a refinance loan

Our experienced team of home loan experts are ready to guide you through the refinancing process. We can answer any questions you have.