Two ways to refinance
Rate and term refinance
You replace your loan without taking cash out. It can lower your interest rate or payment, shorten your loan term, or move you from an adjustable rate to a fixed rate.
Cash-out refinance
You take a new, larger loan and receive the difference in cash. Homeowners use it for:
- Home improvements and remodels
- Paying off high-interest credit cards or other debt
- College costs, a new business or other big goals
When refinancing makes sense
A refinance makes sense when the savings cover the costs in a reasonable amount of time, or when it helps you reach a bigger goal. I run the numbers with you, including how many months it takes to break even, before you decide.
Common questions
How much does it cost to refinance?
Closing costs often run about 1 to 2% of the loan amount, depending on the loan, prepaid items and whether you pay to lower your rate. I'll give you a full estimate before you commit.
Is a cash-out refinance or a home equity line of credit better?
It depends on your current rate and how you'll use the money. If your current rate is low, a home equity line of credit or second mortgage often lets you keep it. I'll compare both for you.
Will refinancing hurt my credit?
We start with a soft credit check, which has no impact on your score. Once we do the refinance, your score can drop a bit as you will be closing your current loan to open a new one and any time you close an account, your credit score can drop a few points. After a few months of making payments on the new loan, your credit will bounce back.