Refinance
Is a new loan worth it? Start with the numbers.
A refinance replaces your current mortgage. It can change your rate, your term or your loan type, and it comes with costs. Here is how to think it through before you apply.
Reasons people refinance
What do you want to change?
Each goal points to a different kind of refinance. Be specific, then compare the whole cost.
Change the rate
If market rates or your finances have changed, a new loan may carry a different rate. Compare the whole cost, not only the rate.
Change the term
A shorter term can cut total interest and raises the monthly payment. A longer term can lower the payment and add interest over time.
Move from adjustable to fixed
If your adjustable rate is about to reset, a fixed-rate loan can make your payment predictable again.
Use home equity
A cash-out refinance turns some equity into cash for a planned purpose. You borrow more against your home, so plan carefully.
Refinance programs
Two ways to refinance with Lendwise
Questions to ask first
Five questions before you decide
01
What do I want to change?
A different payment, a shorter term, a fixed rate, or cash from equity. Each goal points to a different loan.
02
What will it cost?
Closing costs apply to a refinance. Ask for a written list before you decide.
03
How long will I stay?
Divide the closing costs by the monthly difference to see how long it takes to earn them back.
04
What happens to total interest?
A lower payment from a longer term can mean more interest over the life of the loan.
05
Is the new rate fixed or adjustable?
If it is adjustable, ask how far the payment could rise and whether you could afford that.
Illustrative example
How long to earn back the closing costs
Illustrative only. Your closing costs and payment change will differ. This is the arithmetic a loan officer will run with your real figures.
in closing costs
lower payment each month
months to earn the costs back
$4,800 divided by $120 is 40 months. If you may move or refinance again before then, a new loan may not pay off. A lower payment from a longer term can also raise total interest.
Using equity
Cash-out works best with a plan for the money
A cash-out refinance replaces your loan with a larger one and pays you the difference. Lenders usually require that some equity stays in the home, and a larger loan can mean a higher payment. If a loan cannot be repaid, the home is at risk.
