What Is Refinance?
Refinance: Replacing your mortgage with a new one, usually for a lower rate, a different term or cash out.
Also called: refi
Refinancing replaces your current mortgage with a new loan. The new loan pays off the old one.
Reasons to refinance
- Lower rate or payment (rate-and-term refinance)
- Shorter term, such as 30 to 15 years
- Remove mortgage insurance, such as FHA to conventional
- Switch from an adjustable to a fixed rate
- Take cash out (cash-out refinance)
Does it make sense?
Compare closing costs with your monthly savings. If a refinance costs $6,000 and saves $200 a month, you break even in 30 months.
Streamline options
FHA Streamline, VA IRRRL and USDA streamlined refinances can lower your rate with less documentation and often no appraisal, if you already have that type of loan.
Good to know
Unbeatable shows refinance options for homes you own and can alert you when rates make it worthwhile.