Refinance

A refinance replaces your existing mortgage with a new loan, typically to secure a lower interest rate, change the loan term, switch loan types, or access equity through a cash-out option.

There are two main types: rate-and-term refinances (which adjust the rate or term without pulling cash out) and cash-out refinances (which increase the loan amount and pay the difference to the borrower). Each serves a different strategic purpose.

Refinancing is not free. It involves closing costs similar to those on a purchase loan. The key question is whether the long-term savings justify the upfront cost — which is where a breakeven analysis becomes essential.

Why This Matters: A well-timed refinance can save you tens of thousands over the life of your loan. A poorly timed one can cost you more than it saves. Having a loan officer who runs the numbers honestly — and tells you when not to refinance — is invaluable.