What Is a Mortgage Refinance?

A refinance replaces your existing mortgage with a new one, often with better terms. Homeowners typically refinance to:

• Lower their interest rate
• Reduce their monthly payment
• Switch from an adjustable‑rate to a fixed‑rate mortgage
• Shorten their loan term
• Remove mortgage insurance
• Take cash out for home improvements, debt consolidation, or major expenses

Types of Mortgage Refinances

Rate‑and‑Term Refinance

Refinance to a lower rate, a shorter term, or a more stable loan type.

Cash‑Out Refinance

Borrow against your home’s equity and receive cash at closing.

FHA Streamline Refinance

A fast, simplified refinance option for current FHA borrowers.

VA IRRRL (Interest Rate Reduction Refinance Loan)

A streamlined refinance for eligible VA borrowers.

Conventional Refinance

Refinance into a conventional loan to remove FHA mortgage insurance or improve terms.

When Should You Refinance?

  Refinancing may be a smart move when:  

• Interest rates have dropped
• Your credit score has improved
• You want to lower your monthly payment
• You want to switch from an ARM to a fixed‑rate loan
• You want to shorten your loan term (e.g., 30‑year to 15‑year)
• You want to remove FHA mortgage insurance
• You want to access cash from your home’s equity

Even a 1% rate reduction can lead to significant long‑term savings.

Benefits of Refinancing

• Lower monthly mortgage payments
• Reduce total interest paid over the life of the loan
• Pay off your home faster
• Remove mortgage insurance
• Convert equity into cash
• Consolidate high‑interest debt
• Improve financial stability with a fixed rate

How Much Does It Cost to Refinance?

Refinancing typically includes:

• Lender fees
• Appraisal (if required)
• Title and escrow fees
• Recording fees
• Prepaid taxes and insurance

These costs can often be:

• Rolled into the loan
• Covered with lender credits
• Offset by long‑term savings

Your lender will help you calculate your break‑even point — the time it takes for savings to exceed the cost of refinancing.

What Are Points? Should You Pay Them?

Points are upfront fees paid to lower your interest rate. One point = 1% of the loan amount.

Paying points may make sense if:

• You plan to stay in the home long‑term
• You want the lowest possible monthly payment
• You want to reduce total interest paid

Should You Lock Your Interest Rate?

A rate lock guarantees your interest rate for a set period during the loan process. Locking may be smart when:

• Rates are rising
• You’re satisfied with the current rate
• You want payment stability