What Is A Refinance?
Top Refi Reasons
💰 Lower your monthly payment more text here to see what happens with a line break Presentation note goes here
📉 Reduce your interest rate
⚡ Shorten your loan term
🔒 Switch from adjustable to fixed rate
🚫 Remove MI another presentation note here
When Is The Right Time?
- The reason for refinancing will determine when the right time is
Goal | Timeline |
Lower rate | When breakeven period makes sense |
Cash out for debt consolidation/renovation | Immediately |
Remove FHA MIP | When at 20% equity |
Who Shouldn’t Refi?
❌ You Should Probably Wait If:
- Rate improvement is less than 0.5%
- You plan to move within 1-2 years
- Your credit has dropped significantly
- You're underwater (owe more than home is worth)
- You refinanced within the last 12 months
- Break-even period exceeds 4 years
Types of Refinances
Refinance Type | Purpose | Best For | Key Features |
Rate & Term | Lower interest rate or change loan term | Reducing monthly payment or total interest paid | · Most common type · No cash out · Typically lowest rates |
FHA Streamline | Fast, low-cost refinance for existing FHA loans | FHA borrowers wanting to lower rate quickly | · Limited/no appraisal · Reduced documentation · Lower closing costs |
VA IRRRL | Interest Rate Reduction Refinance Loan for VA borrowers | Veterans with existing VA loans | · No appraisal required · Minimal documentation |
Cash-Out | Access home equity as cash | Debt consolidation, home improvements, investments | · Receive cash at closing · Higher rates than rate/term · Increases loan balance |
Rate & Term Refinance
Purpose: Lower your rate or adjust your loan term—without pulling cash out
This is the most straightforward refinance option. You're swapping your existing mortgage for a new one with better terms.
Key Features:
- Works with any loan type — Conventional, FHA, VA, USDA
- No cash at closing — Your loan balance stays the same (or close to it)
- Lower your rate — Reduce monthly payments and total interest paid
- Shorten your term (optional) — Switch from a 30-year to a 15-year and own your home faster
Divorce scenario: If you have a court-ordered payoff to an ex-spouse, a rate/term refi lets you remove them from the loan without it counting as a "cash-out."
FHA Streamline & VA IRRRL
Perfect for: FHA or VA borrowers who want a faster, easier refi
✨ What makes them "streamline"?
- ✅ No income verification — Don't need to prove your income
- ✅ No credit check — Only a soft pull to check mortgage payment history
- ✅ No asset verification — Don't need to show bank statements
- ✅ No appraisal — Saves you time and money
⏰ Timeline requirements (both programs):
- Must wait 210 days from your original closing
- Must have made 6 payments on your current loan
🇺🇸 VA IRRRL Additional Requirement:
- Net Tangible Benefit — Your new loan must provide a real financial benefit (36 month recoupment or less if payment is lower)
⚠️ FHA Exception: If you're removing a co-borrower (like after a divorce), you'll need a "credit qualifying FHA streamline" — which does require income, credit, assets, and appraisal verification.
Cash Out Refinance
Purpose: ✅ Turn your home equity into cash you can actually use
- How it works: You walk away from closing with a check in hand
- Works on: Conventional, FHA, VA
- The trade-off: Slightly higher rates than rate/term refis (but still way lower than credit cards)
- Smart uses:
- 💳 Wipe out high-interest credit card debt
- 🏠 Fund that kitchen remodel you've been dreaming about
- 📈 Invest in a rental property or business opportunity
- 🎓 Pay for college tuition
- The requirement: You more than 20% equity in your home (80% LTV max)
How Refinancing Works Step-By-Step
- 📋 Apply with us — Quick, easy application at winthehouseyoulove.com
- 🎯 Strategy session — We'll analyze your goals and design a custom refi plan (rate, term, cash-out options)
- 💰 Break-even analysis — See exactly when you start saving money
- 🔍 Underwriting — We verify your income, assets, and credit (if needed)
- 🏠 Appraisal (if needed) — Confirm your home's current value
- ✍️ Closing — Sign documents and finalize your new loan
- ⏳ 3-day rescission period — Federal cooling-off period before your new loan funds
Refinancing Costs
- You can set a strategy that works for you
Refinancing typically costs $3,000-$6,000 in closing costs. Here's what you need to know:
💰 What You'll Pay
- Title fees (cheaper than a purchase)
- Appraisal (waived on streamline refis and some conventional)
- Credit report
- Origination/processing fees (varies by lender)
- Recording fees (county charges)
- Escrow (gets refunded back)
📊 Keep In Mind
- Your payoff includes accrued interest — Expect your payoff to be slightly higher than your balance
- You get your escrow back — Refunded within 30 days (typically $2,000-$3,000)
- Roll costs into your loan — No cash due at closing, but you'll pay it back over 30 years
- Skip 1-2 payments — No payments during the transition period (e.g. close in November, first payment is due Jan 1st)
Pro Strategy: Focus on both monthly savings AND total interest saved. Shortening your term saves tens of thousands in interest and builds equity faster.
Common Refinance Traps to Avoid
Trap | What It Means |
🚨 Low-Ball Estimates | Some lenders quote unrealistically low rates to get you in the door, then reveal higher costs later. |
🚨 Hidden Points and Fees | Watch for "point stuffing"—unnecessary discount points or origination fees that reduce your equity. |
🚨 Resetting Your Loan Term | Refinancing 25 years remaining into a new 30-year loan lowers your payment but costs significantly more in interest and delays payoff by 5 years. |
🚨 "No Cost" Refinance Confusion | "No cost" means no out-of-pocket costs—but you're still paying. Either the costs are rolled into your loan balance (paid back over 30 years with interest), or you accept a higher interest rate and the lender covers closing costs with credits. |
🚨 Breakeven Period Miscalculations | Don't include your escrow refund when calculating breakeven. That money is returned regardless—it's not a savings from the refinance itself. |
🚨 "Teaser Rates" That Don't Apply to You | Advertised rates often require 800+ credit score, 40%+ equity, and specific property types. If you don't meet these criteria, your actual rate will be higher. |