Written by Denny Ceizyk | Edited by Kurt Adams | Updated June 1, 2023
If you’d like a little more guidance as you choose a lender, check out our picks for the best mortgage refinance companies.
You typically need at least 3% equity to refinance your mortgage, unless you’re eligible for a streamline refinance program through the FHA, VA or USDA. There are also programs available for homeowners to refinance an underwater home, meaning their outstanding mortgage balance is higher than their home’s value.
The most notable risks that come with mortgage refinancing include:
Because refinance loans require a credit check, the inquiry may drop your credit score by up to five points. When you’re mortgage shopping, try to have your credit run within a 14-day period to avoid a bigger drop from multiple inquiries.
It takes on average 51 days to refinance a home, according to data from ICE Mortgage Technology. Your lender might take more or less time to close a refinance, depending on how much business they have and whether they use a digital mortgage application process.