The mortgage you closed on was based on your life, finances, and goals at that moment. A lot can change after you get the keys. This guide breaks down what refinancing is, why people do it, how the numbers work, and what to expect, in plain language.
Your new loan pays it off and takes its place
If you remember buying your home, much of this will feel familiar. You apply, you're approved, and you close. The difference is what happens at the end.
You apply for a new mortgage with its own rate, term, and costs, based on your finances and your home today.
At closing, funds from the new loan pay off your existing mortgage in full, and that account is closed.
From then on you make one payment on the new loan, structured around what you want your mortgage to do now.
A refinance is a new loan, so it usually comes with costs.
That isn't a reason to avoid it. It's a reason to compare the benefit against the cost before you decide. The tools below show you how.
A lower interest rate is a common reason to refinance, but it isn't the only one. Pick the goal that sounds most like you to see what it usually involves.
The details vary with your current loan and finances, but the main question is simple: are you changing the terms, or also taking cash out?
Changes the terms of your existing mortgage without taking significant cash out. Your balance stays about the same; what changes is how the loan works.
Replaces your mortgage with a larger loan and pays you part of the difference in cash. You're borrowing against the equity you've built, so you'll owe more.
Some eligible borrowers can refinance through a streamlined option with less paperwork. These are designed to improve your rate and terms, not to take cash out.
FHA Streamline
For homeowners with an existing FHA loan. Often reduced documentation, and an appraisal may not be required.
VA IRRRL
The VA Interest Rate Reduction Refinance Loan, for eligible veterans and service members with a current VA loan.
USDA Streamline
For homeowners with a USDA loan who want to lower their rate with less documentation.
Not sure you need to replace your whole mortgage?
A home equity line of credit (HELOC) or home equity loan is a second loan that sits behind your current mortgage, which can make sense if you like the rate you have. Your Loan Officer can compare these side by side.
Equity shapes which options are open to you and how they're priced. Move the sliders to get a rough picture.
If you lower your payment, each month's savings chips away at what you paid to refinance. The point where savings catch up to costs is your break-even. If you expect to keep the loan well past it, the math is more likely to work in your favor.
A shorter term can help you pay off your home sooner and pay less interest overall, but the monthly payment usually goes up. A longer term can lower the payment but may increase total interest. Enter a balance and example rates to compare.
It shouldn't start with paperwork. It starts with understanding what you want your mortgage to do differently. Your Loan Officer is with you at every step.
We look at your current mortgage, your financial picture, and what you hope to accomplish.
Review possible scenarios: loan structure, payment, rate, estimated costs, and long-term impact.
Share information about your income, assets, credit, property, and current mortgage.
Depending on the refinance, this may include an appraisal or other valuation, underwriting, and follow-up documents.
Review and sign your final loan documents. Your new mortgage pays off and replaces your existing one.
No one interest rate, equity percentage, or rule automatically means it's time to refinance. The better question is whether the potential benefit makes sense when you consider the entire picture. Sometimes the numbers point toward refinancing. Sometimes they don't. Understanding why is key.
What we'll look at together
Get your documents ready
Commonly requested items. Your Loan Officer will confirm exactly what your loan needs, and streamline options often need less.
Like your original mortgage, a refinance comes with costs. You'll see them laid out on your Loan Estimate and final Closing Disclosure so you can compare before you commit.
Fees such as origination, title, appraisal, and recording. Often around 2%–6% of the loan amount, depending on the loan and location.
An optional upfront payment to buy a lower rate. Whether it pays off depends on how long you keep the loan.
A slightly higher rate in exchange for credits that cover some costs. Less out of pocket now, more interest over time.
Some costs can be added to your new loan balance. You pay less at closing but borrow more.
Your home's value minus what you owe on it.
Your loan amount as a percentage of your home's value. Lower LTV generally means more options.
The part of your payment that repays the loan and pays the interest.
How long you have to repay the loan, commonly 15, 20, or 30 years.
A fixed rate stays the same. An adjustable rate can change at set intervals.
Insurance some borrowers pay, often until they've built enough equity (PMI on conventional loans, MIP on FHA loans).
An independent estimate of your home's value. Some refinances use other valuation methods or waive it.
How long it takes for monthly savings to cover the cost of refinancing.
An agreement that holds your interest rate for a set period while your loan is finalized.
Possibly. Improved credit or income may open better options, and if things have gotten tighter, there may still be paths, including streamline programs for some FHA, VA, and USDA borrowers. A conversation is the fastest way to find out.
When you refinance the home you live in, federal law often gives you a three-business-day right to cancel after signing, before the loan funds. Your closing documents will explain whether this applies and how to use it.
Once your old loan is paid off, your previous servicer refunds any remaining escrow balance to you, generally within about 30 days. Your new loan will set up its own escrow account if it has one.
Not exactly. Mortgage interest is paid in arrears, so depending on when you close, your first payment on the new loan may not be due for several weeks. The interest for that period is included in your payoff and closing figures. Keep paying your current loan until your Loan Officer confirms it's been paid off.
Often, but not always. Many refinances require an appraisal or other property valuation. Some streamline options and some conventional loans may not. Your Loan Officer will tell you up front.
Applying usually includes a credit check, which can cause a small, temporary dip. Credit scoring models generally treat multiple mortgage inquiries within a short shopping window as a single inquiry, so you can compare options without being penalized for each one.
It depends on the loan. Some programs, especially cash-out and streamline options, have waiting periods or require a certain number of on-time payments. Your Loan Officer can check the rules that apply to your current mortgage.
You borrow above your current balance and take the difference in cash, commonly for renovations or debt consolidation. It raises the new payment and total interest — enter the amount to see the effect.
It replaces your loan with a new one at the term you choose. Matching your remaining term (say, refinancing 24 remaining years into a 20-year loan) avoids stretching interest back out.
Typically 2–5% of the loan amount in closing costs. Some lenders offer low- or no-closing-cost options in exchange for a slightly higher rate — the calculator lets you model both.
A useful test: you plan to keep the home past the break-even point, and the total cost picture (not just the payment) improves. Rate drops of 0.5–1% often clear that bar, but term and closing costs matter as much as rate.
You don't need to watch rates every day or become a mortgage expert. We'll look at your current mortgage, listen to what you're trying to accomplish, and help you understand the options that may be available to you.
This guide is for educational purposes only and is not financial advice or a commitment to lend. Calculators and examples are illustrative estimates, not a quote or Loan Estimate. Rates, fees, terms, and program availability are subject to change without notice and depend on credit approval, property, and other qualification requirements. Refinancing may increase the total finance charges paid over the life of the loan.