Refinance
Replacing an existing loan with a new one, usually to get a lower rate, a different term, or to tap equity.
What does refinance mean?
Refinancing pays off when the monthly savings recoup the closing costs before you sell or move. Watch the term: resetting to a fresh 30-year loan can raise total interest even at a lower rate.
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Related terms
Refinance — frequently asked
When is it worth refinancing a mortgage?
Refinancing usually pays off when you can cut your rate enough to recoup the closing costs before you sell or refinance again — your break-even point. Also weigh switching from an ARM to a fixed rate or dropping mortgage insurance.
How much does it cost to refinance?
Closing costs typically run about 2%–5% of the loan amount, covering the appraisal, lender fees, title and recording. On a $300,000 refinance that is roughly $6,000–$15,000, which your monthly savings must outweigh over time.