Refinance

What it is

A refinance replaces one mortgage with another. Rate-and-term refinances change the rate, the term, or both. Cash-out refinances also increase the balance. Streamline programs on FHA and VA loans skip most documentation and, in many cases, the appraisal.

Whether a refinance is worth doing comes down to three things: the difference between your current rate and the new one, the closing costs, and how long you will stay in the home. A lower rate on a loan you sell out of next year rarely pays for itself.

We run a break-even analysis on every refinance quote so the crossover point is visible in months, not in a general impression that a lower rate must be better.

Who it fits

• Homeowners with a rate above the current market
• Borrowers who want to end mortgage insurance
• Owners shortening from a 30-year to a 15-year term
• Anyone whose financial profile has changed since the original loan

How it runs

1. 1Break-Even AnalysisWe calculate how many months of savings it takes to recover the closing costs.
2. 2ApplyA standard mortgage application. Most refinances involve less coordination than a purchase.
3. 3AppraiseAn appraisal establishes current value, though some streamline programs waive it.
4. 4CloseRefinances on a primary residence include a three-day right of rescission after signing.