Refinancing can be confusing with the many financing and credit options available to homeowners. Learn what refinancing a mortgage involves and how it can benefit you.
Refinancing is a process homeowners go through to change the interest rate and/or terms of their current mortgage. In essence, refinancing is changing aspects of your mortgage. Refinancing is not taking out a second or additional mortgage, such as a home equity loan or home equity line of credit.
Imagine that your current interest rate is at 6.5%* (not unusual just a few years ago) and you have the opportunity to refinance at 4.5%*. Before taxes and insurance, here is how 2% impacts this monthly mortgage payment.
$1042.91 monthly payment ($165,000 mortgage at 6.5%*)
$836.03 monthly payment ($165,000 mortgage at 4.5%*)
$206.88 monthly savings
* Please note that interest rates are used as examples only and not intended to indicate actual rates currently available.
Use our mortgage calculators to see for yourself how refinancing your current mortgage with a different rate and term may impact your monthly payments.
There are several refinancing options to consider:
Perhaps the most common reason to refinance is to lower your interest rate and, consequently, your monthly payment as well as the overall cost of your home. The interest rate on your mortgage has a substantial impact on the amount of your monthly payments.
You also might consider refinancing if your mortgage has an adjustable rate and you want a more traditional mortgage. Or, you may be looking to consolidate debts at a lower interest rate. There are several reasons to explore refinancing.
There are three steps on how to refinance a mortgage.
Want to learn more about refinancing your mortgage? We’re ready to help.