Refinance
Refinancing replaces your current mortgage with a new one. It is worth doing when the maths says so, and I will tell you plainly when it does not.
In plain language
A rate and term refinance changes what you pay and how long you pay it. A cash out refinance replaces the loan with a larger one and hands you the difference, using the equity you have built.
Every refinance has costs. The question is always how long it takes for the saving to pay them back, and whether you will still be in the home by then.
This is probably you if
- Your rate is meaningfully above what is available to you now
- You want to drop mortgage insurance you no longer need
- You want to consolidate expensive debt, or fund a renovation, against equity you already have
- You want to shorten the term and stop paying interest for another two decades
Three steps, in order
- We work out your break even first. If it is longer than you plan to keep the house, I will say so and we will leave it alone.
- We decide whether the costs are financed into the loan or paid at closing, because that changes the break even entirely.
- We close, and the new payment starts. Nothing changes about the house itself.
What people ask me
There is no magic number, and the old rule of thumb about one percent is not how this works. It depends on your balance, your costs and how long you are staying. The refinance calculator gives you a break even in months, which is the honest answer.
It does unless you choose a shorter term. That is why a lower payment can still mean more lifetime interest. The calculator shows both figures side by side, deliberately, so the trade is visible.
Most programmes want you to keep a meaningful share of equity in the home afterwards, and how much depends on the loan type and occupancy. VA is the most generous here. Send me your balance and I will tell you what is available.
Worth a look while you are here
Fixed Rate Mortgage
One payment, one rate, for the whole loan. The default for a reason.
Read moreFHA Home Loan
A lower bar to clear. Built for buyers with a smaller down payment or a shorter credit history.
Read moreVA Home Loan
No down payment, no monthly mortgage insurance. The strongest loan in the country, if you earned it.
Read moreThink Refinance might be the one
Let us confirm it against your actual numbers before you fall in love with a house.