When you refinance a mortgage, you're paying off your original mortgage and replacing it with a new one. The new mortgage typically has a rate, term, or cash-out option that supports your financial goals better than your original mortgage. The most common reasons we see our members refinancing are to:
Take Advantage of Better Interest Rates
If current mortgage rates are lower than when you purchased your house, it may be an indicator that now is a good time to consider refinancing.
Reduce Monthly Payments
Looking to make your existing mortgage more budget-friendly? Refinancing to reduce your rate or extend your loan term may help you achieve just that!
Get More Affordable and Predictable Payments
Converting your adjustable-rate mortgage (ARM) to a fixed-rate mortgage may be a good option if adjustable rates are on the rise. With a fixed-rate mortgage, you don't have to worry about changing rates and can enjoy more predictable monthly payments.
Pay Off Their Loan Faster
Have your finances improved? If you're in a better financial position now than when you purchased your home, reducing the length of your loan and making larger monthly payments could help you save money in the long-term.
Tap into your home equity to get cash when you refinance. Cash-out refinancing can be a good option for larger, long-term expenses like home improvements.
Whatever your reason, we're here to help! Have questions?
Is Refinancing Right for You?
How Long Are You Going to Stay in Your House?
It can take several months, or even years, to break even on refinancing costs. If you're expecting to move in the near future, refinancing might not be the best choice for you.
Can You Budget for Refinancing Costs?
Similar to your original mortgage, there will likely be closing costs with refinancing, such as appraisal fees and title insurance. Consumers sometimes build these costs into the loan, but doing so can increase your monthly payment and loan term.
How's Your Credit?
Your credit can impact your ability to qualify for the best rates. If your credit could use some improvement, consider holding off on refinancing until your credit is better.
How Will You Use Your Cash-Out?
Because you'll be paying interest on the cash over the life of the mortgage, the cash is best used for large, long-term investments like home improvements or college expenses. For other expenses, look into conventional financing options first. For example, if you're shopping for a new car, it may be tempting to take a $15,000 cash-out with your refinanced 20-year mortgage at 3.80% APR, but you'd pay over $6,000 in interest on the cash-out alone by the end of your loan. On the other hand, a traditional 5-year auto loan at 4.80% APR for that same $15,000 would cost you less than $2,000 in interest, and your car would be paid off significantly faster.1
Will You Save on Interest?
If your goal is to save on interest, you'll want to run the numbers to check if refinancing will achieve that. The amount you save on interest can depend on factors like the amount refinanced, if the borrower took cash out, and the refinanced rate and term. Borrowers sometimes find that, even with a lower rate, they'll be paying more in interest after refinancing.
Still not sure if refinancing is the right option for you? Don't worry! Our mortgage professionals are ready to help you understand your options and answer your questions.
Ready to Get Started?
If refinancing your mortgage feels like a good fit for you, let's get started! Click the "Apply Now" button below to start your online application.