When should I refinance my mortgage?

Consider refinancing when rates are at least 0.50% lower than your current rate, your credit score has improved significantly, or you want to change your loan term. Calculate the break-even point to make sure you will stay in the home long enough to recoup closing costs.

How much does it cost to refinance?

Refinancing typically costs 2-5% of the loan amount in closing costs. On a $300,000 loan, expect $6,000-$15,000. Some lenders offer no-closing-cost refinances but compensate with a higher rate.

Can I refinance with bad credit?

Yes, FHA Streamline refinances do not require a credit check if you are current on your existing FHA loan. For conventional refinances, you typically need a 620+ score. Higher scores get better rates.

How long does refinancing take?

A typical refinance takes 30-45 days from application to closing. Streamline refinances (FHA/VA) can close in as few as 15-20 days.

Refinancing Guide: Lower Your Rate, Save Thousands

Everything you need to know about refinancing your mortgage — when it makes sense, what it costs, and how much you could save. A complete homeowner's refinance resource.

What Is Mortgage Refinancing?

Refinancing means replacing your current mortgage with a new one — typically to get a lower interest rate, change your loan term, or tap into your home equity. You go through a similar process as your original mortgage: application, appraisal, underwriting, and closing. The new loan pays off the old one, and you start making payments on the new terms.

0.50%+

Min. Rate Drop to Consider

2-5%

Closing Costs (% of Loan)

30-45

Days to Close

$200+

Typical Monthly Savings

Types of Refinancing

Rate-and-Term Refinance

The most common type. You change your interest rate, loan term, or both — without taking cash out. Goal is to save money on monthly payments or total interest paid.

Cash-Out Refinance

Replace your mortgage with a larger one and take the difference in cash. Use for home improvements, debt consolidation, or major expenses. See our cash-out refinance guide.

Streamline Refinance

Simplified refinance for FHA (FHA Streamline) and VA (IRRRL) borrowers. Less paperwork, often no appraisal required. Must result in a net tangible benefit.

When Does Refinancing Make Sense?

Good Reasons to Refinance

Rates have dropped 0.50%+ below your current rate — the traditional rule of thumb
Your credit score improved significantly since you got your original loan
You want to switch from ARM to fixed before your adjustable rate resets higher
You want to shorten your term — go from 30-year to 15-year for faster payoff and less interest
You need to remove FHA MIP — refinance to conventional once you have 20% equity
You want to tap equity — cash-out refinancing for home improvements or debt consolidation

Break-Even Analysis

The key question: how long until your monthly savings cover the closing costs? If closing costs are $6,000 and you save $200/month, your break-even is 30 months. If you plan to stay in the home longer than that, refinancing makes financial sense.