Refinance
Whether you want to lower your rate, shorten your term, or access your home's equity, there's a refinance path designed for your situation. Refinancing replaces your existing mortgage with a new one — ideally at a lower rate, a different term, or with cash-out proceeds. The right refi depends on three things: your current rate and term, your remaining loan balance and equity, and how long you expect to stay in the home. Run the breakeven before you commit — if you'll sell or refinance again before recouping closing costs, a refinance can cost more than it saves.
Bought at a higher rate and wants to capture savings now that rates have dropped. Typical target: at least 0.75–1% rate reduction, with a breakeven inside the expected hold period.
Moving from 30-year to 15-year to save substantial lifetime interest. Monthly payment goes up, but interest paid over the life of the loan drops by hundreds of thousands on a typical balance.
Once they hit 20%+ equity and 620+ credit, existing FHA borrowers refi to conventional to eliminate permanent monthly mortgage insurance — often the single biggest monthly savings available from a refi.
Accessing built-up equity to fund a major home project or consolidate high-interest debt into the mortgage. Most effective when the use of funds increases home value or meaningfully reduces total monthly debt service.
Current loan is about to exit the fixed period; borrower wants to lock in long-term rate certainty before adjustments kick in. Straight rate-and-term refinance to a 30-year or 15-year fixed.
Existing VA borrower using the Interest Rate Reduction Refinance Loan — a VA-to-VA streamlined refi with minimal documentation, often no appraisal, and a specifically discounted funding fee.
Monthly P&I drops from $2,388 to $2,155 — $233/month savings. Closing costs $7,500. Breakeven at month 32. If you plan to stay 5+ years, the refi nets ~$6,000 in savings over the 5-year window.
Same rate, same term. Monthly P&I unchanged, but $137/month in FHA MIP eliminated. Closing costs $6,500. Breakeven at month 47. Worth it if you're staying 5+ years.
Monthly P&I jumps from $1,848 to $2,573 — +$725/month. But lifetime interest drops from $365k to $163k — a $202,000 savings over the life of the loan if you can afford the higher payment.
Example figures use illustrative rates and are for educational purposes only. Actual rates, terms, and costs depend on credit profile, market conditions, and property specifics.
Three primary reasons to refinance: (1) you can lower your rate enough to break even on closing costs within your expected hold period — the 1% rule is a rough guideline, (2) you want to shorten your loan term and save substantial interest (e.g., 30-year to 15-year), or (3) you want to pull cash out for renovations, debt consolidation, or a major expense. Running the breakeven math is essential before committing.
The month when your accumulated monthly savings equal your total closing costs. If you pay $6,000 in closing costs and save $200/month on your new payment, you break even at month 30. If you plan to sell or refinance again before that point, the refi isn’t worth it.
Typical closing costs run 2–5% of the loan amount — appraisal, title, origination, recording fees, prepaid interest and escrows. On a $400k refinance, expect $8–20k in closing costs. Some lenders offer no-cost refinances that bake costs into a slightly higher rate.
Depends on your hold period. Paying one point (1% of loan amount) typically lowers your rate by 0.25%. If you’ll keep the loan long enough for the monthly savings to exceed the upfront point cost, buy points. Otherwise, take the higher rate and save the upfront cash.
Yes. Conventional rate-and-term refinances go up to 97% LTV; FHA up to 97.75%; VA up to 100%; USDA up to 100%. Cash-out refinances have tighter LTV limits — typically 80% for conventional, 80% for FHA, and 90% for VA.
A streamlined refinance of an existing FHA, VA, or USDA loan into the same program, with minimal documentation and often no appraisal. FHA Streamline, VA IRRRL, and USDA Streamline are examples. They’re purely rate-reduction tools — no cash out, and they typically keep the same program.
Typically 30–45 days for a full refinance. Streamline refinances (FHA Streamline, VA IRRRL, USDA Streamline) often close in 15–21 days because of reduced documentation. Appraisal turn time is the biggest variable.
Typically no — you make your regular payment on the old loan up until the refinance funds. The new loan then starts a fresh amortization. The appearance of “skipping a month” comes from how interest accrues during the 30–45 day closing window, which is normal.
Yes — this is the most common FHA refinance motivation. Once you have 20%+ equity and 620+ credit, a conventional refi eliminates FHA’s permanent monthly MIP. Run the breakeven: sometimes the rate premium on the new loan offsets the MIP savings if current rates are meaningfully above your FHA rate.
Cash-out resets your entire mortgage — usually wrong if you have a low existing rate. HELOC keeps your existing first mortgage and adds a variable-rate line behind it. See the HELOC vs. cash-out comparison page for a side-by-side analysis, and run both through the relevant calculators before deciding.
Estimate monthly savings and break-even timelines for a rate-and-term refinance.
Open calculatorModel equity access, new loan balance, and payment impact for a cash-out scenario.
Open calculatorCompare a HELOC against a cash-out refinance to choose the right equity path.
See HELOC optionsSide-by-side comparison of monthly payment structure, rate type, and closing costs.
Compare optionsTiming, break-even analysis, and equity strategy considerations.
Read guidesCheck today's refinance rate index before running numbers.
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