Mortgage Refinance
Refinancing replaces an existing mortgage with a new one. A rate and term refinance changes the interest rate or payoff period, while a cash-out refinance also converts part of your equity into cash.
The decision usually comes down to the break-even point: how long it takes for the monthly savings to cover the closing costs of the new loan, compared with how long you plan to stay.
Availability
Hire Best Pros is not connecting people with mortgage refinance professionals yet. This page is here as background reading while we work on it. Everything we do cover today is listed in our service directory.
What people usually need
- Lowering a monthly payment
- Shortening the loan term
- Removing mortgage insurance after equity growth
- Cash-out refinancing to fund a renovation
- Moving from an adjustable to a fixed rate
What to weigh before hiring
Break-even math
Divide total closing costs by the monthly savings to find how many months it takes to come out ahead.
Restarting the clock
A new thirty-year term lowers the payment but can raise total interest paid over the life of the loan.
Equity requirements
Cash-out refinancing generally requires leaving a share of equity in the home, and an appraisal determines the figure the lender uses.
Common questions
- Is refinancing worth it for a small rate drop?
- Only if you stay long enough to pass the break-even point. On a large balance a small drop can still pay off quickly.
- Can I refinance to fund a remodel?
- A cash-out refinance is one option, and a home equity loan or line of credit is another. Which is better depends on your current rate.
Related reading
- Which home improvements bring the best returnWhere remodeling money tends to hold its value, where it does not, and how to decide when you are staying rather than selling.
- Remodeling an older homeThe conditions that commonly appear in older houses once work starts, how to budget for them, and how to judge whether a house with problems is still a good buy.