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Should you refinance?

The question: Does it make sense for me to refinance?

For: Owners thinking about a new rate, payment, cash or term

2-minute readFrom Stage 6: OwningLast reviewed October 2026

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The short version

A refinance replaces your mortgage with a new one. It comes with closing costs, usually an appraisal, and a new payment schedule. It makes sense when the new loan does something specific for you:

  • Lower the rate or payment
  • Remove mortgage insurance
  • Take cash from your equity
  • Change the term: shorter to pay off sooner, or longer to lower the monthly payment. A longer term still lets you pay extra and finish sooner.

Every goal comes down to one test: whether the savings or benefits outweigh the costs over the time you will keep the loan.

If you have an FHA, VA or USDA loan, a streamline refinance may lower your rate or payment with less paperwork.

Go deeper

What a refinance costs

Expect lender fees, an appraisal, title insurance for the new lender and recording fees. You will also fund a new escrow account and prepay some interest, but those are not true costs. The escrow is your money, and your old servicer must refund the old escrow balance within 20 business days of payoff.

A "no-cost" refinance still has costs. They are paid by a lender credit in exchange for a higher rate. That can make sense if you might move or refinance again soon.

A new 30-year term is a limit, not a schedule

A new 30-year term does not mean 30 more years of payments. It sets the longest the loan can run, not how long you have to take. Keep paying what you pay today, and the difference goes to principal, so at the lower rate the new loan can be paid off on or before the date your current loan would end.

For example, six years into a 30-year loan, a new 30-year loan lowers the payment partly by allowing six more years. Pay only the new payment, and you pay less each month but may pay more interest in total. Keep paying your old amount, or choose a 20- or 25-year term, and the payoff date stays where it is or comes sooner.

The refinance calculator shows both: tap "Keep today's payment" to see when the new loan would be paid off.

When not to refinance
  • You expect to sell before the savings repay the costs.
  • The monthly savings are small next to the costs.
  • You want cash, but your current rate is low. A second mortgage on top may cost less than re-pricing your whole balance.
  • Your credit or income has changed since you bought, and a full refinance would be priced less favorably than you expect. Ask us to check before an appraisal is ordered.

Your next step

The last step of this pathGet your Mortgage PlanIt starts with a conversation. Daniel builds your Mortgage Plan from it: every option that fits, side by side, with your payment, cash to close and cost over time.Get started

Leave the path: Lower my rate or paymentTake cash outGet rid of mortgage insurance