Refinancing a Home

If you already have a mortgage, it may make sense for you to refinance. You can take advantage of better rates and terms and potentially save thousands over the life of your loan.

What is Refinancing?

When you refinance your mortgage, you’re paying off your old loan with a new loan. You can save money by getting a lower interest rate, changing to different terms (i.e., switch from a 15-year to a 30-year term) or taking cash out of your home equity.

Benefits of Refinancing

There are several good reasons you should refinance, and you should consider more than just the interest rate:

  • Reduce your monthly mortgage payments
  • Take out cash at closing—consolidate your debt
  • Switch to a fixed rate from an adjustable rate mortgage (long-term savings)
  • Say goodbye to Mortgage Insurance


Benefits aside, there are several factors to consider when thinking about refinancing your home. A lot depends on your financial situation, which you should carefully analyze to see if the timing is right for you. Consult with your mortgage professional for advice on your particular situation.

  • Refinancing could make sense if your adjustable rate mortgage is about to reset to a higher rate.
  • A rule of thumb is that the new rate should be at least 2% lower for the refinance to be worthwhile, though even a 1% drop can sometimes be beneficial.
  • If you plan to move soon—anywhere from 3-5 years depending on the loan—refinancing likely doesn’t make sense. You’ll need that time to recoup the costs of refinancing.

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