See if refinancing makes sense for you in 2 minutes: check your break-even, your best option and the steps to get there.
Run My Numbers
Refinancing usually makes sense when all three of these are true:
Find out in about 2 minutes with the free calculator below. No credit pull, no contact info.
Three steps: tell me what you want the refinance to do, see your new payment and break-even point, then see the refinance option that fits you best. No credit pull.
Use your latest mortgage statement.
Break-even is how many months of savings it takes to earn back your closing costs.
Based on your goal, your loan type and your equity.
Estimates only, not a loan offer or commitment to lend. Your actual rate, closing costs and approval depend on credit, property, loan amount and market conditions. Dan Frio | NMLS #246527 | PBT Bancorp | NMLS #257781.
Lower your monthly payment, pay the loan off sooner, drop mortgage insurance, switch from an adjustable to a fixed rate, take cash out, or remove someone from the loan. Your goal decides which refinance fits.
From your latest mortgage statement: loan balance, interest rate, principal and interest payment, and loan type (conventional, FHA, VA or USDA). Then estimate your home's value to see your equity.
Closing costs divided by monthly savings = months to break even. If you will keep the home and the loan longer than that, the savings after that point are yours.
Already FHA or VA? A streamline is usually the fastest, cheapest route, with no appraisal. Need cash with a low rate today? A HELOC keeps your first mortgage. Homeowners 62 and older can also look at a reverse mortgage.
FHA StreamlineVA IRRRLCash out and home equity5-Day HELOCReverse mortgage (62+)
Rates and fees vary from lender to lender for the same borrower. With one application and one credit pull, I compare 30+ lenders. Already have a Loan Estimate from someone else? Send it over and I will review it line by line for free.
Once you choose an offer, lock your rate. Most refinances close in about 30 to 45 days. On your primary home you have 3 business days after signing to cancel.
| Option | Best for | Appraisal? | Learn more |
|---|---|---|---|
| Rate-and-term refinance | Lower rate or payment, shorter term, adjustable to fixed | Usually | Refinance rates |
| FHA Streamline | Current FHA loans; no income documents | No | Calculator |
| VA IRRRL | Current VA loans; lowest paperwork | Usually no | VA refinance |
| Cash-out refinance | Large cash need when your current rate is not low | Yes | Cash-out options |
| HELOC or home equity loan | Cash while keeping a low first-mortgage rate | Often automated | 5-Day HELOC |
| Conventional refinance to drop MI | FHA or PMI loans with 20%+ equity | Yes | Refinance rates |
| Reverse mortgage (HECM) | Homeowners 62+ who want no monthly mortgage payment | Yes | Reverse mortgage |
Not ready yet?Rate Watch tracks the market against your loan and tells you when a refinance would save you money.
Divide your total closing costs by how much you save each month. The answer is your break-even in months. If you plan to keep the home and the loan longer than that, and the new loan reaches your goal (lower payment, shorter term, cash out or no mortgage insurance), refinancing is worth a closer look. The calculator on this page does the math for you.
There is no single magic number. The old rule of 1% to 2% ignores your loan size and how long you will stay. On a larger loan a smaller drop can pay off quickly, and on a small loan even a big drop may not. Use the break-even math instead of a rule of thumb. FHA Streamlines require a net benefit, usually about a 0.5% drop in your combined rate and mortgage insurance.
Closing costs usually run about 2% to 5% of the loan amount. You can pay them at closing, roll them into the new loan on most refinances, or take a slightly higher rate and let a lender credit cover them (a no-closing-cost refinance).
A rate-and-term conventional refinance can often be done right away. Cash-out refinances usually need 6 to 12 months of ownership. FHA Streamlines and VA IRRRLs both need 210 days and 6 payments.
Applying causes a hard credit inquiry, which usually lowers your score by a few points for a short time. Several mortgage inquiries within a short shopping window are generally counted as one, so comparing lenders does not multiply the impact. With one application, I compare 30+ lenders on a single credit pull.
If your current rate is lower than today's rates, a HELOC or home equity loan usually costs less because you keep your first mortgage. If your current rate is higher, a cash-out refinance can lower your rate and give you cash in one loan.
One point costs 1% of the loan amount and lowers your rate. Points only pay off if you keep the loan long enough to recover what you paid, so they make the most sense when you plan to stay for many years and do not expect to refinance again soon.
Most refinances close in about 30 to 45 days. Streamline refinances with no appraisal can be faster. On a primary home you have 3 business days after signing to cancel before the loan funds.
One application and one credit pull compares 30+ lenders. Free to start, no obligation.
Not all applicants will qualify. Savings, costs and terms depend on underwriting and market pricing. Dan Frio | NMLS #246527 | PBT Bancorp | NMLS #257781. Mortgage products are originated by PBT Bancorp, NMLS #257781.
It's generally a good time to refinance when mortgage rates are 2% lower than the current rate on your loan. It may be a viable option even if the interest rate difference is only 1% or less. Any reduction can trim your monthly mortgage payments. Example: Your payment, excluding taxes and insurance, would be about $770 on a $100,000 loan at 8.5%; if the rate were lowered to 7.5%, your payment would then be $700, now you're saving $70 per month. Your savings depends on your income, budget, loan amount, and interest rate changes. Your trusted lender can help you calculate your options.
Most lenders charge fees to refinance a loan. So, if you plan to only stay in the property for a couple of years, your monthly savings may not accumulate to recoup these costs. Example: A lender charged $1,000 to refinance your loan that resulted in saving you $50 each month; it would take 20-months to recoup your initial costs. Some lenders will charge a slightly higher than average interest rate on refinance loans, but will waive all costs associated with the loan. This will depend on the interest rate on your current loan.
Starting with an application fee for $250 - $350, you may need to pay an origination fee typically 1% of your loan amount. In most cases you will pay the same costs you had with your current home loan for the title search, title insurance, lender fees, etc. The total sum could cost up to 2-3% of the loan amount. If you don't have the funds to pay for associated loan costs, you can search for lenders that offer "no-cost" loans which will charge a slightly higher interest rate.
A point is a percentage of the loan amount, or 1-point = 1% of the loan, so one point on a $100,000 loan is $1,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Discount points are fees used to lower the interest rate on a mortgage loan by paying some of this interest up-front. Lenders may refer to costs in terms of basic points in hundredths of a percent, 100 basis points = 1 point, or 1% of the loan amount.
Yes, if you plan to stay in the property for a least a few years. Paying discount points to lower the loan's interest rate is a good way to lower your required monthly loan payment, and possibly increase the loan amount that you can afford to borrow. However, if you plan to stay in the property for only a year or two, your monthly savings may not be enough to recoup the cost of the discount points that you paid up-front.
Mortgage rates can change from the day you apply for a loan to the day you close the transaction. If interest rates rise sharply during the application process it can increase the borrower's mortgage payment unexpectedly. Therefore, a lender can allow the borrower to "lock-in" the loan's interest rate guaranteeing that rate for a specified time period, often 30-60 days, sometimes for a fee.
It's unsure how interest rates will move at any given time, but your lender may estimate where interest rates are headed. If interest rates are expected to be volatile in the near future, considering locking your interest rate may be good because it allows you to qualify for the loan. Or, if your budget could handle a higher loan payment, or lender's lock fees, you may want to let interest rates "float" until the loan closing.
Even with poor credit getting a home loan is still possible. A lender will consider you to be a risky borrower and to compensate for this they will charge you a higher interest rate, and expect a higher down payment usually 20%-50%. The worse your credit history is, the more you can expect to pay.
Not necessarily, if you've been late with your payments less than 3-times in the past year, and the payments were no more than 30-days late, you still have a good change at getting a competitive interest rate. Most lenders will accept certain reasons for this like an illness, or job-change, but explanations are required.
There are two important things to consider when choosing one lender over another one:
