Refinancing Options
Refinancing
Does refinancing
make sense for you?
Compare what you have today with what a new loan would actually change: payment, term, equity and cost.
Questions first?
Your goal
What are you trying to change?
Whether a refinance is worth it depends on the result you want.
Lower the payment
Compare the proposed payment with what you pay today.
Take cash out
See how much equity you can access and what you’d owe afterwards.
Change the term
A shorter term builds equity faster; a longer one lowers the payment.
Consolidate debt
Weigh the new mortgage against the debts it would pay off.
Break-even calculator
How long until it pays for itself?
Divide the cost of refinancing by what you save each month. If you’ll keep the loan longer than that, it can make sense.
Before you decide
Compare more than the rate.
A lower rate or payment alone doesn’t tell you whether refinancing is worthwhile.
- Monthly payment: what you pay now, and what you’d pay after
- Transaction costs: lender, settlement and other costs of the new loan
- Time horizon: how long you expect to keep the property or the new loan
- Balance and equity: what you’d owe and the equity left in the property
- New loan terms: rate, term and payment side by side with your current mortgage
In depth
Which refinance option fits your goal?
To lower your rate and payment
A fixed-rate loan locks a rate in for the life of the loan, which suits you if you expect to stay more than five years or so. If you expect to move within a few years, an adjustable-rate mortgage (ARM) with a lower initial rate may lower the payment more.
To take cash out
For home improvements, tuition or other plans, a cash-out refinance borrows more than your current balance. If you’ve had your mortgage for years, or your current rate is higher, you may be able to do this without raising your monthly payment.
To consolidate debt
With enough equity, paying off higher-rate debt such as credit cards, home equity loans, car loans and some student loans with a lower-rate mortgage can reduce what you pay each month. It can also increase the total interest you pay over time, so we compare both.
To pay the home off sooner
A shorter term, such as 15 years, means higher payments in exchange for substantially less interest and faster equity. If your balance is already well paid down, the payment may barely change. For illustration only: a $150,000, 30-year loan at 8% has a principal and interest payment of about $1,100. Refinancing a remaining $130,000 into a 15-year loan at 6% gives a payment of about $1,097.
General information only. Refinancing may increase total finance charges over the life of the loan and may not be right for every borrower. Rates in the example are illustrative, not current offers. Terms, costs and eligibility vary by borrower, property, program and lender.
Compare your mortgage with the alternative.
Start a refinance review online. Or call 305-933-1626 to talk it through.