Loan Guides • Refinance

Refinance Your Mortgage: A Plain-English Guide

Thinking about lowering your payment, shortening your term, or tapping equity? This guide walks through when a refinance can be a smart move, how costs work, and what to compare before you say yes.

Existing homeowners with a current mortgage Rate/term, cash-out & debt-consolidation refis Focused on numbers, timelines & trade-offs

Explore refinance options → Talk through “should I refi?” first

Refinance at a glance

~6 min read

Refinance at a glance

A refinance replaces your current mortgage with a new one. The right structure can lower your payment, change your term, or turn equity into cash—but it always comes with costs to compare.

① Rate-and-term refis focus on better terms—payment, rate, or years remaining.
② Cash-out refis convert equity into cash for projects, payoff strategies, or investments.
③ You’ll weigh upfront costs vs. long-term benefit over a real timeline, not just month one.

Designed to answer “does this really make sense?” Plain-English • Numbers-focused

Smart calculators for real-life refinance decisions
Use the mortgage calculator to compare your current payment with potential new scenarios— different interest rates, terms, and cash-out amounts. Then we can walk through the results together and see how long it takes to break even.

Run refinance estimates →

Coaching insight

When a refinance is usually worth a closer look

A refinance isn’t automatically a good idea just because rates move. It becomes powerful when it lines up with a clear goal and a realistic timeline.

It may be worth exploring if you:

Have a rate that’s meaningfully higher than what’s available today, and you plan to stay in the home for a while.
Want to shorten your term (for example, 30-year to 20- or 15-year) and can comfortably handle the payment.
Would like to tap equity for projects, debt consolidation, or investments and want one payment instead of many.
Need to change loan type—for example, from an ARM to a fixed rate, or from FHA to Conventional to remove MI.
Have enough time in the home for the monthly savings to outweigh the costs of the new loan.

It may be less ideal if you expect to move soon, if costs are high relative to the benefit, or if a HELOC/home equity loan would give you more flexibility with less disruption.

How it works

Rate-and-term vs. cash-out—and what the costs look like

Rate-and-term refinance

Focuses on improving the loan itself: interest rate, term, or both.
Often used to lower the payment or pay the home off sooner with a shorter term.
May or may not require cash at closing, depending on how costs are structured.

Cash-out refinance

Replaces your current loan with a new one for a higher amount, turning some equity into cash.
Can be used for home improvements, debt consolidation, or other large goals.
Typically has different pricing and equity requirements than a simple rate-and-term refi.

Closing costs & how they’re paid

Refis still have closing costs: appraisal, title, lender fees, prepaids, and escrows.
Those costs can often be paid in cash, rolled into the new loan, or covered with a lender credit in exchange for a higher rate.
The key question isn’t “what are the costs?”—it’s “how long until this pays me back?”

We’ll build a simple break-even picture: how much you’ll spend to do the refi, how much you’ll save each month, and what that looks like over your 3–7 year horizon.

Approval & structure

Refinance vs. staying put vs. HELOC: how we compare them

Refinance vs. keeping your current loan

When we compare, we’ll look at:

Current payment vs. new payment, including taxes and insurance.
Remaining term vs. new term and what that does to total interest.
How long you plan to keep the home and the loan itself.

If the savings don’t justify the costs in your likely timeframe, we’ll say so plainly.

Refinance vs. HELOC / home equity loan

Sometimes a full refi is too blunt an instrument. A HELOC or fixed home equity loan can:

Leave your current low-rate first mortgage untouched.
Give you flexible access to equity for projects or consolidation.
Work as a short- to medium-term tool while you keep options open.

We’ll compare structure, risk, and total cost so you’re choosing the tool that matches your plans.

You don’t have to know which path is “right” going in. The goal is to see numbers and trade-offs clearly enough that the decision becomes obvious instead of stressful.

Approval basics

Credit, income & equity: what really matters on a refi

Even though you already have a mortgage, a refinance is still a new loan. Lenders will look at:

Credit profile – scores, payment history, and recent behavior.
Income & employment – income that is stable and likely to continue (W-2, self-employed, 1099, etc.).
Debt-to-income (DTI) – how your new payment, plus other debts, compares to your income.
Equity position – your home’s value vs. what you owe, especially on cash-out refis.

Different programs (Conventional, FHA, VA, Jumbo, Non-QM) have different tolerances and pricing. We’ll match your file to the lane that fits your credit, equity, and goals—not just your current loan type.

Real-world example

Homeowner lowering payment and consolidating debt

Example scenario (for education only)

Imagine a homeowner with a current 30-year fixed at 6.875%, a few years into the term, plus higher-rate credit cards and a personal loan. They plan to stay in the home for at least 5–7 years.

We might compare:

Staying put and paying extra toward principal or debts separately.
Rate-and-term refinance to a lower rate, keeping debts separate.
Cash-out refinance that pays off the higher-rate debts and consolidates everything into one mortgage payment.

The math would show payment changes, closing costs, total interest over the timeline you care about, and how quickly the refi “pays for itself.” The right answer is the one that balances stress, flexibility, and long-range plans—not just today’s rate.

Next steps

What to have ready when we look at refinance options

You don’t need a perfectly organized file to start, but these items help us give you cleaner numbers quickly:

Most recent mortgage statement – current balance, payment, and escrow details.
Property details – address, occupancy (primary, second home, or investment), and rough value.
Income details – pay stubs, W-2s, or self-employed documentation.
Snapshot of debts – credit cards, auto loans, personal loans you’re considering consolidating.
Cash on hand – how much you want to keep in reserves vs. bring to closing (if any).
Timeline & goals – how long you expect to stay, and what you care about most: payment, payoff speed, or flexibility.

Want to rough in the numbers before we talk? You can use my mortgage calculator to estimate payments at different rates, terms, and loan amounts. It’s for estimates only—we’ll still build your final refinance plan using live pricing and your full approval file.

Smart questions

Questions to ask about any refinance quote

As you compare offers or tools, these questions help you cut through noise and marketing:

What’s my total monthly payment now vs. after the refi? (Including taxes, insurance, and HOA.)
What are my total closing costs? (And are they being paid in cash, rolled into the loan, or offset by a lender credit?)
How long is my break-even point? (How many months until the savings equal the costs?)
How does this look over 5–7 years? (Not just what it costs to get in, but what it costs to stay.)
How does a refi compare to a HELOC or home equity loan for my goals?
What are my options later if rates change again or my situation shifts?

If you can answer those clearly, you’re not guessing—you’re making a conscious decision based on your numbers, not just headlines.

Ready to see if a refinance really pencils out?
We’ll line up your current loan, potential new options, and your goals—then show you in plain English whether a refi, a HELOC, or staying put serves you best.

Explore refinance options → Schedule a 30-minute call Try refinance estimates (approximate)