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Is Refinancing Worth it?

When you start thinking about refinancing your mortgage, it all comes down to the numbers. Are you going to be in a better position, or not? Whether you want to lower your monthly payment, the overall cost of your loan, or take some cash out, you’re going to want to know if the end result is going to better than your current situation. Our refinance calculator will help you decide how much you will save.

What is mortgage refinancing?

At it’s most basic, a mortgage refinance is when you replace your current loan with a new one. Getting a refinance is similar to the loan you already have except it will likely come with new terms and rate. You will apply the same way you did with your current loan, which will include a credit check, employment history, income and other financial requirements. You will also have to have a home appraisal done to evaluate the property and how much equity you ultimately have in the property.

Your refinance loan will pay off your current mortgage and you will just be responsible for the new loan. Most people choose to refinance for better rates to help lower their monthly mortgage payment or shorter terms to be able to pay off their mortgage a little earlier and save more over the life of the loan. Some will choose to do a cash-out refinance and pull out some of the equity they have as cash. They can use it to reinvest into the home in the form of renovations and upgrades, or use it to pay off large debts, which will ultimately help with their overall monthly bills.

How much does it cost to refinance your mortgage?

Most refinances will help you save money in your monthly payments or even over the life of your loan, but there are upfront fees associated with the process, just as there were when you bought your home. Those refinance closing cost fees may include:

• Lender fees (application fee, origination charges, and any points)
• Title search fee
• Document recording fees
• Appraisal fee
• Credit check
• Escrow (mortgage insurance and property taxes)

Overall closing costs will depend on your loan value, the rate of the loan, your DTI, and what loan program you chose to use for your refinance. Make sure to ask your loan provider what specific fees are involved so you understand everything you will be responsible for upfront, before you go through with your refinance.