Refinancing
A lower payment, a shorter term, or cash from your equity — refinancing only makes sense when the math works. Here is how to judge it honestly.
Talk it through with Douglas Wilkerson, Mortgage Broker / Branch Manager, before you decide.
Refinancing replaces your current mortgage with a new one. It is worth considering when one of these is true:
It is usually not worth it when you plan to move or refinance again before you reach break-even, or when the savings are small compared with the closing costs.
The most common refinance. You change the interest rate, the loan term, or both, without borrowing extra money. The goal is a lower payment, a shorter payoff, or both.
You borrow more than you currently owe and take the difference in cash at closing. How much you can take depends on your equity, the loan program, and underwriting requirements.
For eligible veterans with an existing VA loan, the Interest Rate Reduction Refinance Loan is a streamlined refinance that can lower your rate and payment with less paperwork. An appraisal and income verification are often not required.
The only math that matters in a refinance is the break-even point: total closing costs divided by monthly savings equals the months to break even.
For example, if closing costs are $6,000 and the new payment saves you $200 a month, break-even is 30 months. If you expect to stay in the home longer than that, the refinance pays for itself. If you might sell or refinance again sooner, it costs more than it saves.
Watch out for “no closing cost” refinances: the costs are not gone, they are rolled into a higher rate. Run the comparison both ways before you choose.
It can. A new 30-year loan resets the clock, which can mean paying more interest overall even if the payment drops. Ask about shorter terms or making extra principal payments to keep your payoff on track.
Closing costs vary by loan size and program, and typically include lender fees, title and recording charges, and prepaid items. Your lender must disclose the full figures before you close, so you can work out break-even exactly.
The VA Interest Rate Reduction Refinance Loan is a streamlined refinance for veterans who already have a VA loan. It generally requires a lower rate than the current loan and involves less documentation than a standard refinance.
Yes, with a cash-out refinance, if you have enough equity and meet the program and underwriting requirements. Cash-out proceeds can be used for renovations, debt consolidation, or other major expenses.
Applying for a mortgage typically involves a credit inquiry, which may lower your score slightly for a short time. Multiple mortgage inquiries within a short shopping window are generally treated as a single inquiry by scoring models.
Timelines vary with the lender, the program, and how quickly documents and an appraisal (when required) are completed. Streamline refinances are often faster than standard ones.
Then run the break-even math with Douglas before you commit to anything.
Equal Housing Opportunity. Mortgage services are provided by Douglas Wilkerson, Branch Manager and Mortgage Broker with Edge Home Finance Corporation. Loan programs, rates, eligibility, underwriting guidelines and availability are subject to change. All applications are subject to credit review, verification, property eligibility, applicable underwriting requirements and final approval. This website does not constitute a commitment to lend or a guarantee of financing.