Refinance loans are a great option for many borrowers who are looking to save a considerable amount of money over the life of their home loan and improve their financial outlook. Refinances allow you to pay off your current loan and restructure the mortgage to better fit your needs. Our refinance calculator can help you determine if this mortgage solution is right for you.
Refinancing might be right for you if your home value has increased significantly or interest rates are lower than when your mortgage first began. A refinance loan might:
- Save you money by shortening the term of your loan
- Lower your monthly payment with a reduced interest rate
- Protect your mortgage from rate increases by converting an adjustable-rate mortgage to a fixed-rate one
- Combine multiple liens into a single loan for savings and simplicity
- Consolidate debts from high-interest credit cards or subordinate loans into one loan for lower monthly payments
- Turn the equity in your home into cash
If a refinance loan seems to be the right solution for you, here are a few programs you can choose from:
A cash-out refinance allows you to receive cash out of the equity you have in your home by replacing your current mortgage with a new mortgage valued at more than you owe on your house. This option can help you pay for major expenses (things like debt, tuition, or home improvements) by borrowing against the value of your home. Please note that an appraisal is required for refinance loans and the property value may affect the loan amount.
An adjustable-rate mortgage (ARM) is one where the loan’s interest rates is susceptible to periodic change after an initial fixed-rate period. With an ARM, your monthly loan payments may increase and decrease based on fluctuations in the loan market. Borrowers who only plan on staying in their home for a few years, are expecting an increased salary, or cannot afford the current interest rate on a fixed-rate mortgage might be good candidates for an adjustable-rate mortgage.
Fixed-rate mortgages help protect you from market fluctuations by ensuring that the rate remains the same over the life of the mortgage. Additionally, you can select different terms, or lengths, of the loan (10, 15, 20, 25, or 30-year term). Note that a fixed-rate loan may have higher monthly payments, but they also provide the opportunity to build equity in your home faster than you might otherwise. This equity can be used as a down payment for your next home or a cash-out refinance. If you have plans to be in your home for a longer period of time, a fixed-rate mortgage might be the right solution for you.