Reasons to refinance
- Rate and term: lower your rate or change your term to save interest.
- Cash-out: borrow against your equity for renovations, tuition or high-interest debt.
- Remove mortgage insurance: move from FHA to conventional once you have enough equity.
- Fixed instead of adjustable: lock in a payment before an ARM adjusts.
Does it make sense?
Compare your closing costs with your monthly savings to find your break-even point. If you plan to stay past that point, a refinance usually pays off. Restarting a 30-year term can lower your payment but raise total interest, so look at both numbers.
Using a cash-out refinance to pay off credit cards turns unsecured debt into debt secured by your home. If you're struggling with payments, compare it with the options at Debt Relief Path first.
Questions
How much equity do I need?
Most conventional refinances need at least 3% to 5% equity for rate-and-term and 20% for cash-out. FHA and VA streamline refinances have their own rules.
How long does a refinance take?
Often 30 to 45 days from application to closing, sometimes faster with an appraisal waiver.