Refinancing your mortgage can help you lower your monthly payments, reduce your interest rate, or access your home equity. Learn how it works and whether it's right for you.
Mortgage refinancing is the process of replacing your existing home loan with a new one, typically with different terms. When you refinance, you pay off your current mortgage and take out a new loan, often with a lower interest rate, different loan term, or to convert from an adjustable-rate to a fixed-rate mortgage.
Homeowners refinance for various reasons, including reducing monthly payments, paying off their mortgage faster, eliminating private mortgage insurance (PMI), or accessing cash through their home equity.
The most common type of refinancing. You change your interest rate, loan term, or both without changing the loan amount. Ideal for lowering your monthly payment or paying off your loan faster.
Allows you to borrow more than you owe on your current mortgage and receive the difference in cash. Useful for home improvements, debt consolidation, or major expenses.
You bring cash to closing to pay down your mortgage balance. This can help you qualify for a better rate, eliminate PMI, or reduce your monthly payment.
Available for government-backed loans (FHA, VA, USDA). Offers simplified paperwork and may not require an appraisal or income verification.
Even a small reduction in your interest rate can save you thousands over the life of your loan.
A lower rate or longer term can decrease your monthly mortgage payment, freeing up cash for other expenses.
With a cash-out refinance, you can tap into your home's equity for renovations, education, or debt consolidation.
Refinancing to a shorter term helps you build equity faster and pay less interest overall.
Move from an adjustable-rate mortgage to a fixed-rate for more predictable payments.
Refinancing makes sense when you can secure a lower interest rate (typically at least 0.5% to 1% lower than your current rate), when you plan to stay in your home long enough to recoup closing costs, or when you need to access cash for important expenses.
Consider refinancing if your credit score has improved significantly since you got your original mortgage, if you want to remove PMI, or if you need to switch from an adjustable-rate to a fixed-rate mortgage.
Calculate your break-even point by dividing your closing costs by your monthly savings. If you plan to stay in your home beyond that point, refinancing could be beneficial.
See if you qualify for refinancing programs available in your area.
Check Your Eligibility