Terms & Conditions Apply, NMLS#1136
Refinancing your mortgage replaces your current home loan with a new mortgage that cuts your monthly payment, pays your loan off faster or gets rid of mortgage insurance. The LendingTree Mortgage Refinance Calculator will help you decide if and when you should refinance your mortgage.
The answer is simple: shop around. LendingTree studies show that consumers who shop for a mortgage save thousands of dollars in interest charges.
Mortgage interest rate forecasts change frequently, which means rates may change their pricing strategies daily. Shopping gives you the best chance of catching a special deal or moving on from a lender that’s not competitive.
Some big news about rates in 2023: The Federal Housing Finance Agency (FHFA) announced pricing adjustment changes for a number of factors. Most of the changes go into effect on May 1, and they could have an impact on the conventional mortgage refinance rate you’re offered. Look for the sign below for more information about the changes and how they might affect the mortgage rate you’re quoted.
Here are a few steps that may help you get the best rate:
A refinance is a process that involves paying off your current mortgage and replacing it with a new home loan. The most common reason to refinance your mortgage is to lower your interest to reduce your monthly payment.
Unless you’re eligible for a streamline refinance program like the FHA streamline or VA interest rate reduction refinance loan (IRRRL) the following steps best describe how to refinance a mortgage:
There are a number of financial goals you can achieve by refinancing your mortgage. Below are some reasons to refinance your mortgage.
If you aren’t eligible for the FHA streamline or VA IRRRL program, here’s what you’ll typically need to complete a refinance.
You may be tempted to just ignore the “Length of Ownership” field in your calculations and leave it pre-set to five years. However, before you spend thousands of dollars on closing costs, get your home appraisal and provide all the documentation you typically need to refinance, make sure you’ve given some thought to how much longer you’ll be in the home.
Is it time to get a bigger home to support your growing family? Maybe it’s time to downsize your home now that the kids have flown the coop. Or it could be time to ditch city living for a home in the country. Pondering these questions before you refinance could save you time and money on something that won’t benefit you financially.
Conventional refinance loans. Fannie Mae and Freddie Mac set the guidelines for the most popular loan type: conventional loans. You can avoid mortgage insurance with 20% equity in your home.
FHA refinance loans. Homeowners with scores as low as 500 may qualify to refinance with an FHA loan. However, you’ll pay FHA mortgage insurance regardless of your equity amount.
VA refinance loans. Eligible military borrowers may be able to borrow up to 100% of their home’s value with a VA rate-and-term refinance. VA borrowers can borrow 90% of their home’s worth with a VA cash-out refinance.
USDA refinance loans. Borrowers in rural areas with current USDA loans can lower their payment, but don’t have a cash-out option.
If the break-even point doesn’t quite make sense for a refinance, consider one of these alternatives.
• Recast your loan. If you’re about to receive large lump sum of cash from a bonus or the sale of another property, your current lender may allow you recast your mortgage. Your new loan amount — and monthly payment — are based on how much cash you pay toward the balance. You can skip all the closing costs and paperwork, although the lender may charge a small fee to complete the process.
• Biweekly payment. If the payment shock on a 15-year mortgage is too much for your budget, try paying your mortgage every two weeks. Most lenders offer the option to set up biweekly payments, which shaves interest charges and a few years off your mortgage.
• Ask your lender to remove PMI. You may be able to get rid of your monthly private mortgage insurance charges if you have 20% equity in your home from value increases in your neighborhood. Call your lender and ask them about the process — for the cost of an appraisal you may be able to permanently drop your monthly PMI cost.