Refinance Calculator

What does refinance mean?

A refinance, often referred to as a "refi", is when you modify and replace the terms (usually a new principal amount and/or interest rate) of your existing mortgage with a new home loan. The new mortgage is used to pay off the old one and then you will begin paying down the new mortgage instead.

What are the most common reasons to refinance a mortgage?

Refinancing your mortgage can offer a host of benefits, namely, saving money in the long run. Other common reasons to refinance a mortgage include:

• Market mortgage rates are lower than your initial rate. When market rates fall below the rate you are currently paying, a refinance could help you save money in the long run if you can lock in a lower interest rate.
• Manage debt. A refinance gives you the opportunity to cash in on your home equity. You can use that cash to manage your other debts like student loans or credit card debt.
• Lower monthly payments. You may qualify for lower monthly payments on your refinance.
• Access home equity with a cash-out refinance. A cash-out refinance lets you leverage your home equity any way you choose. You can use the cash obtained from a cash out refinance for a vacation, buying a car, the list could go on.
• Eliminate mortgage insurance. After you meet certain loan conditions, you may be able to rid yourself of the mortgage insurance that protected your lender in case you defaulted on your loan. A refinance could give you the opportunity to remove that line item from your budget.

Common types of refinance loans

• Cash-out refinance*. Is your home worth more than what you owe on your current mortgage? A Cash-out refi can help you tap into your home's equity to use however you want.
• Fixed-rate refinance. Similar to a traditional fixed-rate mortgage, a fixed-rate mortgage refinance offers a fixed interest rate that won’t change over time.
• Adjustable-rate refinance. An adjustable-rate mortgage (ARM) refinance offers a refinance with a lower initial interest rate for a set number of years. After this initial period, the rate will change at set intervals based on the market rate.
• Conventional refinance. Conventional mortgage loan refinances often have lower rates since they feature higher income and credit requirements.
• Jumbo refinance. When the value of the home exceeds the standard conforming loan limit in your area, a jumbo mortgage loan refinance can help refinance a higher priced home.
• FHA refinance. Backed by the Federal Housing Administration (FHA), an FHA loan refinance is designed with lower down payment, income, and credit requirements.
• VA refinance. With a VA loan refinance, Veterans, active-duty military members, and qualified spouses can refinance to a VA mortgage that fits their needs.
• USDA refinance. A USDA loan refinance is available in USDA-eligible areas, just like a USDA mortgage. This type of refi requires no down payment and offers 100% financing.

When can I refinance my house?

As you start to repay your mortgage, it's common for homeowners to wonder if they can refinance. Often, they want to refinance to a more favorable interest rate or change how long they will be repaying the loan. But there is a waiting period before you can refinance your original mortgage. Depending on the lender, your refinance program, and your initial mortgage terms, you may have to wait at least a year before you can refinance; however, the average waiting period to refinance a mortgage is six months to two years.

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How to refinance a mortgage

Once you’ve decided to refinance your mortgage, you will go through a process similar to getting a traditional mortgage. First, you will need to select your refinance type such as a rate refinance, term refinance or cash-out refinance, to name a few.

Then, you’ll gather your financial updated documents and information again to apply for your mortgage refinance. After that, you’ll lock in a new rate, the refinance will go through underwriting, an appraisal will need to be conducted on your home and then you can close on your refinance.

How many times can you refinance your home?

If you refinanced your home recently and are wondering how soon you can refinance again, you have come to the right place. Technically, there is no limit on how many times you can refinance your home, however the amount of equity that remains in your home after each refinance will have an impact on when you can refinance again. Also, there may be a waiting period if you have recently purchased or refinanced the property.

Your lender may tell you that you have to wait between 6 and 12 months before you can apply for another refinance. That said, if you are refinancing to get rid of private mortgage insurance (PMI), you may have to wait longer than that depending on your lender and loan details. If you have questions about your mortgage and a refinance, connect with a PrimeLending loan officer to discuss what your options may be.

Refinance vs. Cash-out Refinance

A mortgage refinance and a cash-out refinance may sound similar, but they typically serve different purposes. Many homebuyers seek a refinance to change their loan terms or save on interest. With a refinance, a borrower does not get any money back, just a new mortgage.

With a cash-out refinance, a borrower can access a portion of their home equity when their home is worth more than what they owe on their current mortgage. The difference between the two is paid back to the borrower in a lump sum which they can use any way they want. You can learn more about cash-out refinances here.

Can you refinance a home equity loan?

A home equity loan is a mortgage option that allows a borrower to get a loan to help them access their home equity, like a cash-out refinance. Borrowers can refinance their home equity loan and typically do so if they can get a better rate or a different payment method.

How much does it cost to refinance a mortgage?

Much like the initial costs associated with getting a mortgage to purchase a home, there are costs affiliated with refinancing your mortgage. Costs and fees associated with a refinance include bank fees, appraisal fees, attorney fees and title insurance. You’ll need to plan on paying closing costs up front, which typically range between 2 to 5% of your loan amount. A mortgage refinance calculator can help you get a better understanding of what you could save.