What You'll Learn
- Refinancing your mortgage can help you lower your mortgage rate and reduce your mortgage payments
- If you currently have an adjustable-rate mortgage (ARM) and want the security of a fixed-rate mortgage, talk with your lender about refinancing your mortgage
- It’s important to talk with your lender about the costs and benefits of refinancing over the short- and long-term
Over the course of owning your home, you may consider refinancing to lower the mortgage rate and monthly payment on your mortgage or move to another mortgage product that better fits your needs
With a no cash-out refinance, you are primarily refinancing the remaining balance on your mortgage. You may be able to roll over some of your closing costs into the new refinance mortgage. No-cash out refinances may make sense if you’re looking to:
- Lower your mortgage rate. If mortgage rates are lower than when you closed on your current mortgage, you could reduce your monthly payments and the total amount of interest that you pay over the life of the loan by refinancing at a lower rate. You’ll want to talk with your lender about the costs of refinancing and whether it makes best financial sense for the short- and long-term.
- Move from one mortgage product to another. If your current mortgage is an ARM and it no longer makes sense for your financial and/or personal goals, refinancing your loan can put you in a more secure and stable mortgage, such as the 30-year fixed-rate mortgage.
- Build equity faster. If your financial situation has improved since your purchase, you may consider refinancing to a loan with a shorter term – from a 30-year fixed-rate mortgage to a 15-year fixed-rate mortgage, for example. Your payments will most likely be higher - even if you refinance into a lower mortgage rate – but you can build equity faster, own your home sooner and pay less in total interest charges.
If you’re looking to build equity faster and can afford a higher monthly mortgage payment, talk with your lender about refinancing to a shorter-term loan
Be sure to ask your lender how long it will take to recoup the costs of refinancing your mortgage
If your ARM is adjusting soon, you may want to consider the stability and security of a fixed-rate mortgage