Refinancing & Cash-Out Refinancing
Refinance & Equity
Refinancing & Cash-Out Refinancing
Refinancing replaces your existing mortgage with a new one — potentially at a different rate, term, or with cash out from your home's equity.
Who May Benefit
- Homeowners looking to lower their interest rate
- Those wanting to shorten or extend their loan term
- Borrowers who want to access home equity for improvements or other purposes
- Those switching from an adjustable-rate to a fixed-rate mortgage
- Homeowners who want to remove mortgage insurance
How It Generally Works
A rate-and-term refinance changes your interest rate, loan term, or both without taking cash out. A cash-out refinance replaces your mortgage with a larger loan and provides the difference in cash, which can be used for home improvements, debt consolidation, or other purposes.
Refinancing involves closing costs, which can be paid upfront or rolled into the new loan. A lower monthly payment does not necessarily mean lower total borrowing costs — extending your loan term can increase the total interest paid over time.
Key Considerations
Closing Costs
Refinancing involves closing costs, typically 2–5% of the loan amount. These can be paid upfront or rolled into the new loan. Rolling costs into the loan increases your balance and total interest paid.
Break-Even Analysis
Divide your closing costs by your monthly savings to estimate how long it takes to break even. If you plan to sell before the break-even point, refinancing may not make financial sense.
Loan Term Considerations
Extending your loan term can lower your monthly payment but increase total interest paid over the life of the loan. Shortening the term increases payments but reduces total interest.
Cash-Out Refinancing
A cash-out refinance replaces your mortgage with a larger loan and provides the difference in cash. Your home secures the new loan, and you will pay interest on the full new balance.
Refinancing involves closing costs and may extend your loan term. Lower payments do not always mean lower total costs. All refinances subject to credit approval and program eligibility.
Frequently Asked Questions
Thinking About Refinancing?
Let's look at your current loan and explore whether refinancing makes sense for your goals.
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