Refinancing a Home

Learn everything you need to know about refinancing your loan, including how to find the best company and where to get the lowest rates.

Frequently Asked Questions
  • Is there a way to avoid paying closing costs?

    One strategy that could be beneficial if you plan to refinance again or don’t plan to stay in your home for more than five years is to ask your lender to waive the closing costs: This is known as a “no-closing-cost refinance.” It may cost more, but you won’t have to come up with the funds when closing on the new loan. In order to do this, the lender usually charges a higher interest rate over the entire length of the loan. This often ends up being more expensive than immediately paying the closing costs.

  • When is the best time to refinance?

    First, take your total out-of-pocket closing costs and divide that figure by the amount you would save each month. That figure will be approximately how long it would take to pay back your closing costs. Next, subtract the amount of your estimated payment after refinancing from your current monthly mortgage payment. This is how much extra you would have in your budget each month.

  • Do you lose equity when refinancing a home?

    Whether it’s through principal repayment or price appreciation, the equity you've built up in your home remains yours even if you refinance. Although your equity position may vary with home prices in your market along with the loan balance on your mortgage or mortgages, refinancing in itself won't affect your equity.

  • How often can you refinance your home?

    No existing regulations cap how often you can refinance your home, but lenders typically set limits. Some lenders may also impose prepayment penalties on existing loans. Whether you can refinance will also depend on your credit score and how much equity you have. Note that each time you refinance, you'll pay closing costs and fees that can take years to recoup and your credit will be pulled by lenders, which can negatively impact your credit score if done too frequently.

  • How many times are your credit scores checked when refinancing?

    Your credit scores are pulled once at the beginning of the process and then a second time towards the end of the process. This is to ensure that you did not take out any additional loans or credit cards during the process.

  • What if I don’t qualify to refinance my home equity loan?

    If you can’t refinance your home equity loan and the payments have become unaffordable, contact your loan servicer as soon as possible to ask about a loan modification. In cases of financial hardship, your servicer might work with you to change your loan terms so that the payments fit your budget.

Key Terms

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