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Refinancing Mortgages Your Comprehensive Guide

Are you a homeowner interested in lowering your mortgage interest rate, extending or shortening the length of your loan, making a large purchase, or consolidating debts into a single payment? You can do it by refinancing your home.

You’ll have two paths to explore: a rate-term refinance or a cash-out refinance. A rate-term refinance pays off the balance of your current loan and allows you to obtain new terms, such as a different interest rate or loan length. A cash-out refinance enables you to access funds by tapping into the existing equity in your home.

Pros:

  • Homeowners can obtain a lower interest rate and adjust the term of their loan to either shorten or lengthen it, allowing for an earlier payoff or lower monthly payments
  • Cash-out refinances allow homeowners to tap into the equity they’ve built in their homes to consolidate debt, fund large purchases, or make home renovations
  • Streamline refinances (when available) allow customers to adjust their loan terms to be more favorable, with less paperwork or qualifying requirements

Cons:

  • Most refinances require customers to qualify for the loan in a manner similar to when they purchased the home
  • Closing costs apply
  • Refinance rates are typically higher when compared to rates for purchasing a home
  • Refinancing a home typically requires a professional home appraisal to determine the home’s equity position

Best for:

  • Individuals who own their home
  • Those looking to improve their financial situation with a lower interest rate or lower payment
  • Homeowners seeking a different loan term length
  • Homeowners looking to simplify their monthly payments to consolidate consumer debt into a single payment through their home

What is mortgage refinancing?

Mortgage refinancing replaces your current home loan with a new one. Essentially, you’re paying off your old mortgage by taking out a new loan.

The most common reasons for refinancing include seeking better interest rates, lowering monthly payments, using home equity to make a large purchase or consolidate debt, and using home equity for renovations.

What types of home loans can be refinanced?

Refinancing Loans

Reduces interest rates, adjusts loan terms, or lowers monthly payments.
  • .5-1%
    Typical interest rate reduction
  • 2-3
    Max years to breakeven
Check Rate

Am I eligible for a rate-term or cash-out home refinance?

Borrowers can qualify for home refinancing loans if they meet all of the following conditions:

  • You own a home
  • You have equity in the home

Is a mortgage refinance loan right for my financial situation?

Are you a homeowner looking for an expert opinion? A Summit Mortgage loan officer can help you determine if today is the right time for a mortgage refinance loan.

Schedule a free consultation

A local Summit Mortgage loan officer has the expertise to guide your decision-making process, answer questions, and get you approved with the best refinancing program for your unique situation. Find a loan officer who’s right for you.

Calculate your potential savings

Use our mortgage calculator to estimate your monthly payment by adjusting factors like purchase price, down payment, interest rate, and term. Then, connect with a loan officer to explore mortgage and refinance options that fit your budget.

How do I apply for a mortgage refinance?

Applying for a home refinance loan or determining if a refinance is right for you is simple! Use our Quick Start Form to connect with a Summit Mortgage loan officer who can help guide you through the process.

Curious about what comes next? View our step-by-step application checklist to learn about the application process.

Get Started

Common refinancing questions

  • Why should I refinance my home loan?

    To take advantage of more favorable terms, or if you want to borrow a large sum of money for any purpose. The terms are more consistent and affordable than unsecured loans or other products.

  • How soon can you refinance a mortgage?

    Each case is unique. It largely depends on the type of refinancing you seek (rate-term or cash-out) and your equity, market rates, and other factors. Summit Mortgage can start your loan application today if the situation is right.

  • How quickly can you refinance a home loan?

    Most refinances close within 35 days or less as long as the proper paperwork is provided promptly.

  • How often can you refinance your home loan?

    Unlimited. There is no restriction on how often you can refinance your home. However, there are costs each time you close. It’s essential to weigh the cost vs. the benefits and ensure the transaction meets your needs.

  • Can you refinance a home loan when interest rates drop?

    Yes, you can refinance a loan at any time. When interest rates drop, many homeowners consider refinancing. The critical piece to remember is that the Federal Reserve’s prime rate isn’t directly tied to the mortgage rates. Different factors drive the refinancing rate, so speaking with a mortgage professional to review your situation and find the best terms available is important.

  • Can you refinance an existing home equity loan?

    Yes, when you refinance your mortgage, you can consolidate any other liens (home equity loan, line of credit, down payment assistance, etc.) into one mortgage loan. All that is needed is an appropriate level of equity in your home to qualify.

  • When refinancing a home loan, do you “start over”?

    Yes, your loan “starts over” because it’s a new loan. However, there are several options for loan term lengths so that you can shorten, maintain, or lengthen the life of your loan. If you have been paying on a 30-year loan for 5 years, you can refinance into a 30-year loan, go with a 25-year term to not “start over,” or move to a 5-year loan.

  • Are home refinance loan fees tax deductible?

    Uncertain. Your Summit Mortgage loan officer is not a certified tax professional. Because state and federal tax laws change, you must contact a certified public accountant (CPA) to determine if a loan’s interest is tax deductible or if any other items related to home improvement loans may have a tax benefit.

  • Can I refinance my home loan to buy another property?

    Yes, you can refinance your home to pull cash from the equity to purchase another home. However, restrictions do apply. You must disclose the occupancy plan for your current property and the new one you want to purchase. You will only be able to utilize equity available in the home and still have to meet the requirements for the loan parameters.

Is refinancing your mortgage right for you?

How does refinancing stack up to other mortgage types?

Refinances should not be directly compared to home purchases, as they involve different requirements, parameters, rates, and more, all of which can vary depending on the loan’s purpose. When comparing refinancing options, you’ll find that cash-out refinances typically have higher rates than rate-term or streamline refinances. This is because interest rates are influenced by risk factors, and cash-out refinances are considered riskier due to the higher loan balance and increased loan-to-value ratio.

Schedule a free consultation with our mortgage experts

Summit Mortgage employs some of the most experienced loan officers in the country. Our in-depth knowledge of refinancing, combined with our commitment to understanding your goals, will ensure your homebuying experience is as smooth and rewarding as possible. Find a loan officer near you.

Next steps to find your home loan

Congratulations, you’re on your way to understanding if a refinance mortgage is right for you. If you’re ready to get matched with a Summit Loan Officer to help you with the next steps, use our Quick Start Form.

If you’d like more information first, explore our online resources to learn about the key questions to ask your lender.

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