What does it mean to refinance?
Refinancing replaces your current mortgage with a new one. The new loan pays off your existing balance, and you move forward with updated terms—such as rate, payment, or loan length.
Common reasons homeowners refinance*
- Lower your rate or payment — when market conditions or your credit profile support better terms, refinancing may help lower your rate or monthly payment.
- Shorten your loan term — refinancing to a shorter term may help you pay off the home sooner and reduce total interest, though your monthly payment may increase.
- Switch loan types — for example, moving from an adjustable-rate loan to a fixed-rate loan for predictable payments.
- Tap equity (cash-out) — access a portion of your equity for debt consolidation, renovations, or other goals (closing costs apply; long-term costs may increase).
*Refinancing is not guaranteed and is subject to credit approval. It may result in a higher total cost over the life of the loan, depending on the terms of the new loan.
Rate-and-term refinance vs. cash-out
Rate-and-term focuses on changing the interest rate, the repayment term, or both—without taking cash out at closing.
Cash-out pays off your current loan and provides additional funds at closing based on available equity. Cash-out rules depend on loan type, occupancy, and credit.
How much equity can you access on a cash-out?
Maximum loan-to-value (LTV) depends on the program (conventional, FHA, VA), whether the home is your primary residence, and other risk factors. Your loan officer will confirm what you qualify for.
Is refinancing worth it?
It depends on your goal, how long you plan to keep the home, closing costs, and the new payment. A helpful rule of thumb is to compare your break-even—how long it takes monthly savings to repay closing costs—against how long you expect to keep the loan.
Alternatives to cash-out refinancing
- HELOC or home equity loan — separate financing that leaves your first mortgage in place.
- Personal loan — not tied to home equity; often shorter term and higher payment.
Talk with a loan officer
If your home value increased, rates improved, or your goals changed since you bought, it may be a good time to review options.
Contact us to see what you qualify for
All loans are subject to credit and underwriting approval. Program guidelines, rates, and limits change. This page is for general education and is not a commitment to lend. Ask a licensed loan officer for details that apply to you.