Refinancing a mortgage: When and how to refinance
Get to know the ins and outs of mortgage refinancing and find out what your options are for refinancing.
With so many financing and credit options available to homeowners, refinancing your home loan mortgage might sound confusing when you start the process. Here, we cover what refinancing a mortgage involves and how it can benefit you and your finances.
What is refinancing a home loan mortgage?
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.
Doing the math
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:
* Please note that interest rates are used as examples only and not intended to indicate actual rates currently available.
Use our mortgage calculators to plug in potential refinancing rates and compare them to your current mortgage rate — you’ll be able to see exactly how much refinancing can save you.
Types of refinancing
There are several refinancing options to consider:
When to refinance your mortgage
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.
How to refinance a mortgage
There are three steps to refinancing a mortgage:
Want to learn more about refinancing your mortgage? We’re ready to help.