Current homeowners
Should I refinance?
Learn how to lower your rate, remove mortgage insurance or take cash out, and how to tell when a refinance pays off.
Steps
- Should you refinance?People refinance to lower the rate or payment, drop mortgage insurance, take cash out or change the term. Start with your goal, then check the math.
- Will it pay off? The break-evenDivide the cost of refinancing by the monthly savings to find how many months it takes to come out ahead. Then check the total cost over time.
- Streamline refinancesFHA, VA and USDA streamline refinances need less paperwork and usually no appraisal. Each has a waiting period and a test that the new loan helps you.
- Dropping mortgage insuranceConventional mortgage insurance can be dropped at 80% of the original value and ends at 78%. FHA and USDA insurance work differently.
- Cash-out, or a second mortgage?A cash-out refinance re-prices your whole mortgage balance. If your current rate is low, a HELOC or home equity loan on top may cost less overall.
- Points and the break-evenMortgage points are prepaid interest that lower your rate. They pay off only if you keep the loan past the break-even month.
- Comparing lenders the right wayTo compare mortgage lenders fairly, get Loan Estimates on the same day for the same loan at the same rate, then compare Sections A, B and C on page 2.
- At the end: see it with your own numbersDaniel builds your Mortgage Plan: every option that fits, side by side, with your payment, cash to close and cost over time.